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As filed with the Securities and Exchange Commission on February 14, 2000
File No._________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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WORLD COMMERCE ONLINE, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-2205697
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
9677 Tradeport Drive
Orlando, Florida 32827
(407) 240-8999
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(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Principal Executive Offices)
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Copies of communications to:
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Randolph H. Fields, Esq. Mark E. Patten
Greenberg Traurig, P.A. World Commerce Online, Inc.
111 N. Orange Avenue, 20th Floor 9677 Tradeport Drive
Orlando, Florida 32801 Orlando, Florida 32827
(407) 420-1000 / (407) 420-5909 (Telecopy) (407) 240-8999 / (407) 240-9228 (Telecopy)
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Securities to be Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange on Which
Title of Each Class to be so Registered Each Class is to be Registered
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None None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock ($.001 Par Value)
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(Title of Class)
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS REGISTRATION
STATEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
DIFFERENT FROM THAT CONTAINED IN THIS REGISTRATION STATEMENT. THE INFORMATION
CONTAINED IN THIS REGISTRATION STATEMENT IS ACCURATE ONLY AS OF THE DATE OF
THIS REGISTRATION STATEMENT. IN THIS REGISTRATION STATEMENT, REFERENCES TO
"WORLD COMMERCE," "THE COMPANY," "WE," "OUR" AND "US" REFER TO WORLD COMMERCE
ONLINE, INC.
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TABLE OF CONTENTS
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Item 1. Business..................................................................................................1
Corporate History and Development.......................................................................19
Risk Factors............................................................................................19
Cautionary Note Regarding Forward-Looking Statements....................................................29
Item 2. Financial Information....................................................................................30
Selected Financial Data.................................................................................30
Management's Discussion and Analysis of Financial Condition and Results of Operations...................31
Item 3. Properties...............................................................................................37
Item 4. Security Ownership of Certain Beneficial Owners and Management...........................................38
Item 5. Directors and Executive Officers.........................................................................40
Item 6. Executive Compensation...................................................................................43
Item 7. Certain Relationships and Related Transactions...........................................................48
Item 8. Legal Proceedings........................................................................................50
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters..............51
Item 10. Recent Sales of Unregistered Securities.................................................................52
Item 11. Description of Registrant's Securities..................................................................54
Item 12. Indemnification of Directors and Officers...............................................................59
Item 13. Financial Statements and Exhibits.......................................................................60
Index To Financial Statements...................................................................................F-1
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All statements, trend analyses and other information contained in this
registration statement regarding markets for our products and trends in net
revenues, gross margin and anticipated expense levels, and any statement that
contains the words "anticipate," "believe," "plan," "estimate," "expect,"
"should," "intend" and other similar expressions, constitute forward-looking
statements within the meaning of the federal securities laws, relating to,
among other things, our future prospects and financial performance, expansion
plans, business strategies and their intended results. Individuals considering
an investment in the Company are cautioned that these forward-looking
statements are subject to business and economic risks, including those risks
identified in "Risk Factors" and elsewhere in this registration statement and
our actual results of operations may differ significantly from those contained
in the forward-looking statements because of those risks. The cautionary
statements made in this registration statement apply to all forward-looking
statements wherever they appear in this registration statement.
ITEM 1. BUSINESS
OVERVIEW
We provide Internet-based business-to-business electronic commerce, or
B2B e-commerce, solutions for the global perishable products industries. Our
B2B e-commerce solutions, which we refer to as Global Trade Communities, enable
our customers within the targeted vertical supply chains to utilize the
Internet to execute commercial transactions, access comprehensive industry
information and, access communication tools. Our Global Trade Communities
consist of proprietary and licensed software, hardware and the related
technical services necessary to support our customers that are executing
transactions with the implementation and use of our Global Trade Communities.
Our Global Trade Communities offer a broad range of Internet-based technology
including basic Internet storefronts for advertising, e-mail and messaging
tools for communications, and complex trading systems that enable our customers
to buy and sell product in a secure e-commerce network. Our Global Trade
Communities are designed to be the Internet-based conduit for our customers to
interact and transact business.
Through our wholly-owned subsidiary, World Commerce Online-Floraplex,
Inc., we have designed and implemented our first Global Trading Community,
Floraplex(TM) for the estimated $150 billion global floriculture industry.
Through our wholly-owned subsidiary, World Commerce Online-FreshPlex, Inc., we
have designed our second Global Trading Community, FreshPlex(TM), for the
estimated $550 billion global fresh produce industry. We believe Floraplex and
FreshPlex will provide significant benefits to supply chain participants and
industry professionals, by creating efficiency and improving the effectiveness
of sales, marketing and distribution of perishable products.
We believe the worldwide perishable products industries are
well-suited for our Global Trade Communities due to the following
characteristics:
o Highly fragmented market of buyers and sellers;
o Large transaction volumes;
o Inefficiencies in the supply chain and related cost structure;
o Large variety of non-homogeneous products;
o The time-sensitive nature of perishable products with regard to the
relationship between quality and pricing;
o Large number of buyers and sellers; and
o Highly fragmented industry information, including product varieties
and pricing.
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INDUSTRY BACKGROUND
THE INTERNET AND E-COMMERCE
The Internet has emerged as potentially the most significant force in
global commerce, communication and information for businesses as well as
consumers. International Data Corporation, or IDC, estimates the number of
Internet users will grow from nearly 150 million at the end of 1998 to
approximately 500 million by 2002. The dramatic increase in the number of users
as well as the enhanced sophistication of content and capability have
transformed the Internet from a one-dimensional medium for information and
marketing to a complex tool for conducting business and facilitating
communication. The evolution of Internet acceptance and functionality parallels
the shift of the medium as primarily a tool for business-to-consumer, or B2C,
interaction and commerce to a business-to-business, or B2B, model that offers
business organizations significant strategic opportunities. The strategic
opportunity for B2B e-commerce includes the ability of a business to leverage
resources to reach a global customer base, deliver customized content and open
new or expand existing channels of connectivity for distribution and sourcing.
In addition, B2B e-commerce enables companies to streamline complex, often
manual, processes, lower costs, and enhance productivity. The following
highlights are indicative of the significant growth projected for e-commerce:
o According to IDC, B2B e-commerce is projected to grow to $1.5
trillion by 2003.
o According to Jupiter Communications, Internet advertising
expenditures are expected to grow from an estimated $1.9 billion in
1998 to $7.7 billion in 2002 while B2B advertising is projected to
grow from just under $300 million in 1998 to $2.6 billion in 2002.
B2B e-commerce impacts the fundamental business practices of an
enterprise. B2B e-commerce solutions alter the nature of business relationships
with suppliers, partners, customers and, frequently, competitors. In addition,
the B2B e-commerce solution often represents significant automation to processes
and workflows that were traditionally paper-based and phone-based practices. The
magnitude of the B2B e-commerce transformation on a business operation is
heavily influenced by the level of requisite integration of the B2B e-commerce
solution with the business' existing information systems. The integration
process introduces elements of complexity, cost and timing that will be affected
by the relative sophistication of the business participant. B2B e-commerce
integration and transformation inherently requires training of personnel and
provision of an ongoing customer service capability. The adoption, selection and
implementation of a B2B e-commerce solution represents a significant strategic
decision and level of commitment for a business. Consequently, we believe the
costs of switching to an alternative B2B e-commerce solution would likely be
high.
B2B e-commerce models are being introduced in a large number of
industries. We believe that the B2B e-commerce solution designed to provide
measurable value by providing strategic advantage and the opportunity of
improved automation, reduced costs and increased productivity has the greatest
potential for acceptance and adoption. We believe the potential adoption rate
will be greatest in industries characterized by a highly fragmented network of
supply chain participants, an inefficient supply chain with related inefficient
cost structure, large transaction volume, a large number of buyers and sellers
and a high level of user acceptance of the Internet or desire to be
Internet-enabled.
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THE FLORICULTURE MARKET
The estimated $150 billion global floriculture market encompasses the
production, distribution and marketing of ornamental products and raw materials
as well as consumer-ready products, fresh cut flowers and greens, bulbs,
bedding plants, perennials, trees, potted plants and floral-related hard-goods,
including vases, glassware, and foam as well as tools and supplies. Through a
network of growers, manufacturers, importers, brokers, and wholesalers, flowers
are delivered from growing regions around the world to retail florists and
mass-market distributors such as supermarkets and discount stores. The
estimated $150 billion global floriculture market represents the cumulative
transaction volume at each B2B supply chain segment (e.g., grower to
wholesaler) as well as the B2C volume (retailer to consumer). The global market
is comprised of the following three geographic markets:
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ESTIMATED
MARKETS % SUPPLIED TO GEOGRAPHIC
MARKETS SIZE(7) SUPPLIERS MARKET
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Europe (1) $98B Holland(4) 40%
Germany(4) 15%
Africa(5) 10%
Middle East(5) 14%
Italy(6) 9%
Spain(5) 5%
Denmark(6) 5%
Colombia & Ecuador(5) 3%
Americas(2) $30B Colombia(5) 70%
Ecuador(5) 12%
Holland(5) 13%
Caribbean & other Latin
America(5) 5%
Asia(3) $22B Thailand(5) 23%
Taiwan(5) 16%
New Zealand(4) 15%
China(4) 14%
Singapore(5) 9%
Other(4) 23%
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(1) The vast majority of supply in the European market is channeled through
the auction system in Holland. The auction system is a unique component of
the European market providing logistics functions and financial credit and
payment services. The auctions are sales cooperatives that are
associations of Dutch growers.
(2) Over 85% of product supply imported into the U.S. is handled through
importers in Miami, Florida on a consignment basis.
(3) The significant majority of product produced in these markets is consumed
within the market of origin.
(4) Broad range of floriculture products.
(5) Primarily fresh cut flower product.
(6) Primarily potted plants (shrubs/trees).
(7) Estimates based upon data from University of Hannover, Hortimarc B.V., and
the United States Department of Agriculture.
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At each stage of the distribution chain, the pricing of cut flowers
varies both with supply and demand, as well as quality and freshness.
Inherently, fresh products have to be sold or at least delivered to a buyer
immediately after harvesting. In Europe this problem is addressed by the
auction system using a clock as the pricing mechanism between demand and
supply. Growers deliver their products to the auction where the products are
sold 'at the clock'. The auction system essentially guarantees that nearly all
offered products are sold although the price can vary enormously. In the
Americas, growers, like Colombian and Ecuadorian growers, send a significant
majority of their products on consignment to the buyers/importers in Miami with
the expectation that the market will generate a fair price dependant upon
conditions of supply or demand. Generally, the freshest, most consistent and
highest-quality flowers command the highest prices. A key contributing factor
impacting prices is brand recognition relative to the grower as well as the
growing region. Thus, the distribution system effectively rewards the growers
that produce the best product, the importers and brokers that clear and match
product with buyers most efficiently, and the wholesalers and bouquet-producing
companies that distribute product most effectively while efficiently bringing a
quality product to market.
The distribution channel in the floriculture industry is highly
fragmented. The majority of suppliers are small, family-owned farms that
operate from a single location or from a small number of outlets in a single
region. However, in the Americas market we estimate that more than 50% of the
imported product in fresh cut flowers is grown or distributed by two corporate
operations, including Dole Fresh Flowers. Floral products have historically
been sold at retail through a large number of traditional retail florists.
Currently, more consumers have begun to purchase floral products from
mass-market retailers such as supermarkets, discount retailers and chain
stores. According to estimates of the Floral Index, sales in the retail segment
of the U.S. floriculture industry totaled approximately $15 billion in 1999, of
which $7 billion is fresh cut flowers, with mass-market retailers generating
approximately 50% of the retail sales.
The floriculture industry is built on production cycles, not on
traditional, market-driven sales operations. An increasing number of growers
are producing product year around, in part, to mitigate the impact of
seasonality on their operations and achieve standardized quality for their
buyers. The current supply chain utilizes telephones and facsimiles to execute
transactions. Growers or importers fax their offerings to existing and
prospective wholesale and retail clients. These faxes include product types,
volumes offered and sales prices desired. The fax is followed up by a call in
which the salesperson reviews the product offerings and attempts to get the
wholesaler or retailer to buy the product. Because of the current communication
process, many growers are not knowledgeable of consumer demand levels and
market information. The window of time to execute transactions between importer
and wholesaler is approximately 5-6 hours per day, due to current logistics
constraints and a lack of available information, which makes planning and
forecasting difficult. Once the sale is made, the logistics carrier is notified
and the product is either picked up or delivered to the carrier's refrigerated
trucks. We estimate that 12-15% of imported flowers sold are sold direct by the
growers to wholesalers or retailers.
THE PRODUCE MARKET
The estimated $550 billion global produce market encompasses the
production, distribution and marketing of bulk fresh produce, value-added fresh
produce products (fresh-cut salads, baby peeled carrots, etc.) and supplies and
services for the fresh produce industry. Through a network of growers, packer/
shippers, importer/exporters, brokers, wholesalers and transportation
companies, fresh produce is brought from growing regions around the world to
food service establishments and retail grocers. The
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estimated $550 billion global produce market represents the cumulative
transaction volume at each B2B supply chain segment only (e.g., packer/shipper
to wholesaler). The global market is comprised of the following four geographic
markets:
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ESTIMATED
MARKETS % SUPPLIED TO
MARKETS SIZE SUPPLIERS GEOGRAPHIC MARKET
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North America(1) $215B(5) Domestic 70%
Imported 30%
Latin America(2) $35B(6) Domestic 80%
Imported 20%
Europe(3) $215B(6) Domestic 60%
Imported 40%
Asia(4) $85B(6) Domestic 85%
Imported 15%
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(1) The majority of the product supply for North America originates from 10
states primarily in the Western and Southern United States. During the
winter months, product is imported from countries in the Southern
Hemisphere, including Mexico (50%), other Latin American countries (40%)
and Europe (including The Netherlands, Spain and Israel) (10%).
(2) The majority of product supply for Latin America is grown domestically.
Product that is not grown domestically is imported from the United States
or Canada.
(3) Product that is not provided by countries on the Continent is imported
from Africa, the Middle East, South America and the United States.
(4) China is also a major producer of fresh produce but due to a lack of
distribution infrastructure and unfavorable trade policies, it has not
become a global or even regional supplier.
(5) North American estimates based upon data published by the Produce Marketing
Association.
(6) Estimates based upon data from Novelle Consulting, L.L.C.
The produce industry has experienced significant consolidation in
recent years, including both retail as well as supply, and is a highly
competitive industry. Buyers have increasingly more responsibilities and
sellers are finding the need to become year-round, multi-national suppliers in
order to serve their customers' needs and thereby retain their customers'
business.
Most produce items are very time and temperature sensitive.
Consequently, the supply chain contains a complex distribution/logistics system
to get the product from farm level to consumers around the world. Almost all
produce is shipped to a distribution center before being sent to a retail
location.
The produce industry is built on supply and demand curves. These
market dynamics create wide fluctuations in market prices and provide a
business atmosphere in which up-to-date information that is easy to access and
use is a critical strategic tool.
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THE OPPORTUNITY
We believe there is a significant need for a neutral, Internet-based
B2B e-commerce solution for the global perishable products industries, bringing
buyers and sellers together in a single trading community to execute
transactions online. In addition, we believe there is a significant need for a
consolidated comprehensive information source providing current industry
knowledge and educational resources.
The fragmentation and complexities of the global perishable products
industries and the current paper-based, telephone-based buying processes
provide the core opportunity for a B2B e-commerce solution that seamlessly
links suppliers with buyers of perishable product. To be an effective solution
meeting the needs of supply chain participants, a solution must be
cost-effective, easily implemented and maintained, enable the business to
sustain existing buying policies, offer opportunities for increased access to
suppliers and customers and must represent minimal disruption to the existing
trading model. We believe it is critical that the B2B e-commerce solution offer
an impartial and fair environment for buying and selling with adequate and
accurate product pricing data and product descriptions.
OUR SOLUTION
Our Global Trade Communities are the Internet-based marketplace for
the global perishable products industries facilitating interactions and
transactions by our customers. We leverage Internet technologies, our
management's industry experience, and strategic alliances to provide a
comprehensive B2B e-commerce trading system designed to enhance sales and
marketing productivity, reduce costs, increase customer access, increase supply
chain efficiency (i.e. order and fulfillment cycles) and meet user demand for
online trading capability. We assist our customers in using the Internet for
B2B e-commerce in a secure Internet-based trading environment. Our Global Trade
Communities provide our customers with the ability to leverage the Internet for
expanded access to new and existing customers and suppliers globally, and
enable them to conduct B2B e-commerce.
BENEFITS TO OUR CUSTOMERS
We believe our Global Trade Communities provide our customers with the
following potential benefits:
o Increased product quality based upon the enhanced supply chain
efficiency and effectiveness providing growers with opportunities
for improved profitability
o Single site access to multiple suppliers and buyers, permitting
efficient product procurement and expanded sourcing
o New market access and global reach providing cost effective
strategic growth opportunities without the impediment of geographic
boundaries
o 24 hour/7 day access to "available for sale" inventory expanding
the window of time for procurement processes
o Internet-based, automated, order processing should reduce error and
discrepancy rates, increase process efficiency through access to
expanded supply scheduling, and decrease dependency on and cost of
traditional telecommunication tools
o Paperless record of transaction histories and communications,
providing enhanced demand forecast analysis and reorder capability
o Increased human resource productivity by eliminating manual
interactions (phone and fax) and creating excess capacity for human
capital allocation
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o Reduced marketing costs by allowing targeted marketing campaigns
online (i.e. e-brochures) and utilization of less expensive mediums
for supplementary advertising;
o Opportunity for increased market share from existing and expanded
customer base due to ease of operating system and online features;
o Stronger business relationships from the enhanced connectivity
within a more efficient supply chain;
o Improved logistics, inventory management and production processes
relating to reduced spoilage and improved production scheduling and
forecasting;
o Enhanced profitability potential from expanded revenue opportunity
and increased productivity of personnel;
o Increased access to comprehensive global industry news, daily,
weekly and monthly features, as well as the year-long calendar of
industry events and registration; and
o Convenient, online messaging, teleconferencing and real time audio
and video.
STRATEGY
Our goal is to be the B2B e-commerce solution for the global
perishable products industries, providing an Internet-based utility, which
facilitates global trade and, provides a resource community with communication
capability and comprehensive consolidated industry information and educational
tools. We intend to capitalize on our technology and market position to
establish the standard for global B2B e-commerce in the perishable products
industries. To accomplish our goals, we are pursuing a strategy built on the
following initiatives:
TARGET THE LEADING SUPPLY CHAIN PARTICIPANTS TO ACHIEVE ACCEPTANCE AND
ADOPTION.
We believe successful execution of our B2B e-commerce model must begin
with acceptance and adoption by the leading supply chain participants in each
perishable product industry we target. We introduced Floraplex in January 1999
and FreshPlex in October 1999. Since their introductions we have entered into
strategic alliances with the largest auctions in Holland, the largest grower of
fresh cut flowers worldwide, the largest bulb auction in Holland, several of
the largest growers and wholesalers in Holland, the florist retail association
in Holland, the largest agricultural cooperative in Holland, several of the
largest growers and wholesalers in North and South America as well as a
significant network of some of the largest retail florists in the U.S. We are
seeking to expand our penetration into other leading organizations at each
component of the supply chain in each geographic market for floriculture and
produce. We are expanding our sales organization and creating targeted sales
and marketing initiatives. We are developing programs intended to partner with
the most influential organizations or network of organizations at each
component of the supply chain to promote our B2B e-commerce solutions to their
customers and suppliers and to develop our brand.
ESTABLISH FLORAPLEX AND FRESHPLEX AS LEADING BRANDS FOR B2B E-COMMERCE.
We plan to establish Floraplex and FreshPlex as the industry standard
for B2B e-commerce relative to product quality and operational effectiveness in
the global perishable products marketplaces. We plan to achieve significant
penetration among the leading supply chain participants in our targeted
perishables product industries by promotion of our brands. We believe the
combination of strong brand awareness, the functionality of our Global Trade
Communities, and our customer base and strategic alliances will create
competitive advantage in our market.
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BUILD STRATEGIC ALLIANCES TO STRENGTHEN MARKET POSITION.
We have established and will continue to develop strategic alliances
with capital investors, leading supply chain participants, technology
providers, Internet-based companies, logistics providers, and financial
services organizations to accelerate acceptance and adoption of our Global
Trade Communities and expand our global reach. During 1999 and January 2000, we
entered into the following strategic alliances.
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o Capital investors Interprise Technology Partners, L.P.
o Supply chain participants - Floraplex
Europe Flower Auction Aalsmeer
Flower Auction Holland
Cooperative Netherlands Bloembollen
ZON Auction
Royal CEBECO Group
Vereniging Bloemist Winkeliers
Americas Dole Fresh Flowers
Wholesale Florists and Florist
Suppliers of America
International Floral Distributors
Charles Kremp III
Premier Floral Distributors
o Supply chain participants - FreshPlex Novelle Consulting, L.L.C.
o Technology providers AnswerThink Consulting Group, Inc.
Netera, Inc.
o Financial services eCredit.com Inc.
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We will continue to selectively pursue strategic relationships with
other major supply chain participants, Internet technology providers, Internet
service providers, web site developers and systems integrators, as well as
strategic investors. Our strategic alliances will focus on complementary
Internet-based solutions as well as solutions complementary to our targeted
supply chains including logistics and financial payment systems. We believe
these relationships will accelerate the adoption and penetration of our B2B
e-commerce solutions, increase our brand recognition and enhance the value of
the supply chain to our customer base.
LEVERAGE FLORAPLEX AND ITS BUSINESS MODEL TO FRESHPLEX AND OTHER
GLOBAL TRADE COMMUNITIES.
We have developed and are implementing a business model and technology
infrastructure for Floraplex. We intend to leverage our technology
infrastructure and business model into subsequent Global Trade Communities,
including FreshPlex during 2000. We believe certain similarities in the
perishable products industries provide us with the opportunity to benefit from
our experience with Floraplex and effectively replicate the technology
development and the sales and marketing operations structure.
CREATE AN INTERNET-BASED SALES AND MARKETING TOOL FOR OUR CUSTOMERS.
We believe a functional goal of our Global Trade Communities is to
provide our customers with a secure Internet-based system that significantly
enhances their sales and marketing capabilities. A critical element to
achieving our goal is to have significant industry experience on our management
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team. Our industry experience allows us to understand our customers, optimize
our relationships with key supply chain participants, and efficiently meet the
functional requirements of our customer in the development or advancement of
our technology and related B2B e-commerce tools.
EXPAND AND ENHANCE OUR TECHNOLOGY AND CONTENT TO INCREASE THE VALUE
AND FUNCTIONALITY OF OUR GLOBAL TRADE COMMUNITIES.
We plan to continue to expand and enhance our network content as well
as our Internet-based B2B e-commerce technology to increase performance and
emphasize quality for our customers. We intend to continuously evaluate the
content provided in our information portals and improve or expand the
information to promote quality as well as relevance to our global customer
base. Further, we will evaluate our existing infrastructure of hardware and
software on an ongoing basis to assess performance and customer demand, as well
as identify current advancements in technology that may enhance the quality of
our solutions or the integration of our customer's or strategic partner's
technology.
INTEGRATE LOGISTICS AND FINANCIAL SERVICES IN OUR TRADING SYSTEMS TO
ENHANCE THE VALUE OF OUR GLOBAL TRADE COMMUNITIES.
We believe the B2B e-commerce trading system for the global perishable
products industries must provide customers with the ability to access logistics
services for efficient and cost effective product movement and financial
services for enhanced payment options and timely credit information. In 1999,
we executed an agreement with an Internet-based technology provider to
facilitate financial services between supplier and wholesaler in the Americas
market segment of Floraplex. We will continue to pursue arrangements and
strategic alliances with providers of technology or services specializing in
logistics fulfillment as well as financial services.
STRATEGIC ALLIANCES
We have strategic alliances with Interprise Technology Partners, Flower
Auction Aalsmeer, Flower Auction Holland, Dole Fresh Flowers, Royal CEBECO
Group, Wholesale Florists and Florist Suppliers of America, Charles Kremp III,
Vereniging Bloemist Winkeliers, Cooperative Netherlands Bloembollen, ZON
Auction, International Floral Distributors, Premier Floral Distributors, Novelle
Consulting, L.L.C., AnswerThink Consulting Group, Inc., Netera, Inc., and
eCredit.com, Inc. We intend to enter into additional strategic alliances with
leading supply chain participants, technology companies and logistics and
financial services companies to accelerate market acceptance of our services and
to expand and enhance the value of our Global Trade Communities. We believe
strategic alliances can accelerate market acceptance of our Global Trade
Communities, increase our brand recognition and improve access to our target
customer base.
INTERPRISE TECHNOLOGY PARTNERS
In February 1999, we executed an offering of 4,000,000 shares of Series
A convertible preferred stock with ITP for approximately $8 million in capital
funding. In October 1999 we executed an offering of 5,000,000 shares of Series B
convertible preferred stock lead by ITP for approximately $20 million in capital
funding. In addition, ITP provided access to strategic investors and to
technology service providers, invested in by ITP, that offered strategically
complementary services for our business plan. See "Description of Registrant's
Securities" and "Certain Relationships and Related Transactions."
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FLOWER AUCTION AALSMEER
In December 1999, we reached a cooperative agreement with Flower
Auction Aalsmeer, or the VBA, the world's largest flower and plant auction with
estimated annual sales of $1.5 billion, to integrate Floraplex and assist in
the development of their overall B2B e-commerce strategy. In connection with
the agreement, the VBA will continue to provide their finance and logistics
services.
FLOWER AUCTION HOLLAND
In November 1999, we began a pilot project to implement Floraplex at
the Flower Auction Holland, or BVH, the second largest auction in Holland with
estimated annual sales of $1.4 billion. The pilot program is targeting fresh
cut flower sales that occur before the auction process. In connection with the
agreement, BVH will continue to provide their finance and logistics services.
DOLE FRESH FLOWERS
In December 1999, we entered into a strategic alliance with Dole Fresh
Flowers, the floriculture division of Dole Food Company, a produce and
floriculture company with estimated annual sales of $5 billion, to integrate
Floraplex as their preferred B2B e-commerce solution and provide training,
systems operation materials, cost benefit analyses and discounted rates on our
web marketing products. Under the two year agreement we will conduct cooperative
marketing efforts targeting Dole's primary customer base to promote Floraplex as
the industry standard for B2B e-commerce and as a web-marketing opportunity.
Dole provides an estimated 25% of the fresh cut flower supply in the Americas
market and is the largest single grower in the world.
As part of our agreement, we issued Dole a warrant representing the
right to purchase 1,000,000 shares of our common stock at an exercise price of
$7.50 per share. See "Description of Registrant's Securities."
ROYAL CEBECO GROUP
In January 2000, we entered into a strategic alliance with Royal CEBECO
Group, an agricultural business based in Holland with estimated annual sales of
$6 billion, to develop their global B2B e-commerce solution for their portfolio
of perishable products companies beginning with floriculture. The CEBECO
portfolio includes a produce business with an estimated $1.2 billion annual
sales, a hard good supplier to growers and wholesalers in floricultural and a
feed process operation.
An operating subsidiary of CEBECO purchased 50,000 shares of our
Series B redeemable convertible preferred stock.
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WHOLESALE FLORISTS AND FLORIST SUPPLIERS OF AMERICA
In January 1999, we entered into a strategic alliance with WF&FSA in
which we developed their Internet web-site in return for which WF&FSA promoted
Floraplex exclusively to its approximately 800 members. WF&FSA includes a
membership of wholesale florists and hardgoods suppliers in the U.S. with
annual sales estimated at $1.5 billion.
CHARLES KREMP III
In October 1999, we entered into a strategic alliance with Charles
Kremp III, former Chairman of the Society of American Florists and formerly a
member of the board of the FTD Association, to exclusively promote Floramall and
Florashops.com to retail florists. Specifically, our agreement requires Kremp to
exclusively promote our products to the Kremp Network, a cooperative of large
retail florists throughout the United States. Our strategic alliance with Mr.
Kremp is structured as a three year consulting agreement paying Mr. Kremp
approximately $100,000 annually, paid in quarterly installments. In connection
with the promotional exclusivity with the Kremp Network, we issued Kremp a
warrant representing the right to purchase 250,000 shares of common stock at an
exercise price of $8 per share and 20,000 shares of our common stock.
VERENIGING BLOEMIST WINKELIERS
In January 2000, we entered into a strategic alliance with Vereniging
Bloemist Winkeliers, the Dutch Association of Florists, or the VBW. The VBW is
an 80 year old association with 1,700 members in Holland representing wholesale
and retail florists. Our agreement with the VBW calls for us to assist in the
development of the VBW's e-commerce capability using Floraplex, including B2B
e-commerce using Floramall and B2C e-commerce using Florashops.com.
COOPERATIVE NETHERLANDS BLOEMBOLLEN
In December 1999, we entered into a strategic alliance with Cooperative
Netherlands Bloembollen, or CNB, the largest bulb auction in Holland with
estimated annual sales of $350 million, or approximately 58% of the estimated
$600 million market in Holland. Our alliance with CNB is to assist in the
development of their B2B e-commerce capability using Floraplex. In connection
with the agreement, the CNB will continue to provide their finance and logistics
services.
ZON AUCTION
In December 1999, we entered into a strategic alliance with ZON auction
to assist in the development of their B2B e-commerce solutions for the sale of
floriculture and produce currently traded through their auction. The ZON auction
has estimated annual sales in floriculture and produce of $300 million. In
connection with the agreement, ZON will continue to provide their finance and
logistics services.
INTERNATIONAL FLORAL DISTRIBUTORS
In March 1999, we entered into a 3 year agreement with IFD to provide
their members with a B2B e-commerce solution for selling to retail florists in
the U.S. using the Internet. IFD is an organization of 27 wholesale florists
throughout the U.S. with annual sales of approximately $350 million, or
approximately 10% of the U.S. wholesale market. In connection with this
agreement, we
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have entered into several agreements with IFD members including Kennicott
Brothers, a wholesale florist serving primarily the mid-western U.S. for more
than 120 years, to provide them with a B2B e-commerce solution.
Several members of the IFD purchased 137,500 shares of our Series B
redeemable convertible preferred stock.
PREMIER FLORAL DISTRIBUTORS
In March 1999, we entered into a 3 year agreement with PFD to provide
their members with a B2B e-commerce solution for selling to retail florists in
the U.S. using the Internet. PFD is an organization of 7 wholesale florists
throughout the U.S. with estimated annual sales of $80 million. In connection
with this agreement, we have entered into agreements with several members to
provide them with a B2B e-commerce solution.
NOVELLE CONSULTING, L.L.C.
We entered into a strategic alliance with the Novelle Consulting,
L.L.C., a recognized consulting firm of former executives in the global produce
business, to, among other things, develop and assist in the implementation of
the strategic plan and operational structure for FreshPlex.
As part of our alliance, in April 1999, we issued 5,357 shares of our
common stock to Novelle as consideration for services rendered and a warrant
representing the right to purchase 250,000 shares of our common stock at an
exercise price of $12.38 per share. See "Description of Registrant's
Securities."
ANSWERTHINK CONSULTING GROUP, INC.
In July 1999, we entered into a strategic services arrangement with
AnswerThink, Inc., a leading consulting firm of systems architects and
integrators, to design the integrated technology for our trading systems.
NETERA, INC.
In July 1999, we entered into a strategic alliance with Netera, Inc., a
designer and developer of Internet hardware architectures, to design and build
our Global Trade Communities infrastructure. In November 1999, we implemented
the architectural design and installed our highly redundant web-server
infrastructure at the SunGard Data Systems, Inc. facilities in Philadelphia,
Pennsylvania.
ECREDIT.COM INC.
In December 1999, we entered into a strategic services arrangement
with eCredit.com Inc. to integrate eCredit's Internet-based financial services
product into Floraplex for the Americas market segment providing Internet-based
sourcing of financial payment and credit services. Our three year agreement is
contingent upon the identification and selection of financial partners
acceptable to us to facilitate the payment system for the grower to wholesaler
transactions. Upon satisfaction of the implementation requirements, we are
committed to specified transaction levels in each of the three years beginning
with fiscal year 2000 at agreed-upon pricing levels. Our minimum commitment
relative to fees per payment transactions processed in an annual period is
approximately $1.0 million over three years with the third year representing
nearly 60% of the commitment.
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OTHER ALLIANCES
In January 2000 we entered into strategic alliances with the following
organizations representing several segments of the floriculture supply chain in
Europe with estimated cumulative annual sales of $385 million:
o Disva B.V.; leading potted plants exporter to Europe
o Fleura B.V.; largest cash and carry wholesaler in Germany
o Verhaar Group B.V.; wholesaler of fresh cut flowers and potted plants
in Holland
o Sierafor B.V.; bouquet supplier in Western Europe
o M.J. Weerman B.V.; fresh cut flower exporter in Holland
o Gebroeders Barendsen B.V.; fresh cut flower exporter in Holland
These strategic partners purchased a total of 200,000 shares of our
Series B redeemable convertible preferred stock.
REVENUE MODEL
We anticipate that Floraplex will generate revenues from the following
sources:
o TRANSACTION FEES: We intend to earn revenue from the seller in each
transaction conducted within Floraplex with transaction fees ranging
from 2% to 8% of the transaction order value. The percentage varies
based upon a sliding scale of total transaction volume conducted
within a specified time period. We also intend to earn revenue from
transactions between retailers and end consumers by charging the
retailer a flat fee for each transaction and a fee equal to 5% of
the transaction order value.
o ADVERTISING REVENUE: We intend to earn revenue from advertising fees
paid by business enterprises wishing to reach our customers.
Business enterprises will be charged varying rates for advertising
space through banner displays and "click-through" advertisements.
Floraplex provides a concentration of industry participants which we
believe provides significant opportunity for cost efficient and
effective targeted marketing for a business seeking to reach our
customers. We also intend to earn revenue from advertising fees paid
by our customers who utilize our web-marketing products and
services. We anticipate that our revenue opportunities from
advertising will continue to expand as we pursue affinity marketing
arrangements and strategic sponsorship alliances.
o SUBSCRIPTION FEES: We intend to earn revenue from subscription fees
paid by our customers for access to Floraplex. Subscription fees are
determined according to the nature of a customer's participation and
the number of subscribers. Customers generally will be charged $9.95
per month for access to the information and communication portal and
$99 per month for access and participation in the trading systems.
We anticipate that FreshPlex will generate revenue from the following
sources:
o TRANSACTION FEES: We intend to earn revenue from both the buyer and
seller in each transaction conducted within FreshPlex based upon a
charge per carton which approximates fees ranging from 1% to 2% of
the transaction value. In addition, we plan to earn revenue from
transactions involving industry suppliers such as fertilizer or
pesticide producers with transaction fees ranging from 3% to 5% of
the transaction value.
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o ADVERTISING REVENUE: We intend to generate revenue from advertising
fees in substantially the same manner as Floraplex.
o SUBSCRIPTION FEES: Subsequent to development of the portal o
component of FreshPlex, we intend to earn revenue from subscription
fees paid by our customers for access to FreshPlex. Subscription
fees are determined according to the nature of a customer's
participation and the number of subscribers.
TECHNOLOGY
We have developed and implemented a broad array of technologies using
a combination of proprietary technologies and commercially available, licensed
technologies. Approximately 60% of the technology we currently use is licensed
technology; the remaining 40% is proprietary technology. To develop our
technology, we spent approximately $7.6 million in 1999 and $0.4 million in
1998.
We developed the applications using the Microsoft Suite of development
tools. This allows our customers to buy and sell product over the Internet
quickly and easily. In addition, we developed an XML application available in
our trading systems which allows our customers to upload their available for
sale inventory and other pertinent business information into our trading system
as well as download inventory and sales data. Our current strategy is to license
commercially available technology whenever possible while also having internal
resources capable of systems development and strategic relationships for
third-party development. We expect that commercially licensed technology will
continue to be available at reasonable costs.
Our web-marketing products incorporate advanced software applications
to enable Internet-based promotions through direct e-mail programs and
electronic catalog distribution with interactive ordering capability.
Scalability. The scalable structure of our hardware and software
allows for rapid deployment of our Global Trade Community framework to new
geographic markets or industries while maintaining desired user performance
standards. In the rapidly changing Internet environment, the ability to update
an application to stay current with new technologies is critical. The system's
base technology and database design allow for the addition, modification, or
replacement of Web site based applications in a cost-efficient and expeditious
manner.
Reliability and Security. We use CheckPoint's Firewall-1 software to
protect our Web servers. Our Web server production machines are located at the
facilities of SunGard Recovery Data Systems, Inc. in Philadelphia, Pennsylvania.
SunGard provides professional data center hosting facilities and redundant
high-speed Internet connectivity. SunGard also provides monitoring and support
24 hours a day, seven days a week supplementing our own system administrators.
We encrypt all data internally and externally using DES encryption, a secure
socket layer, and the Hyper-Text Transmission Protocol Secure browser protocol.
We have developed our own content and Web site management tools to
facilitate the maintenance and updating of our Global Trade Communities. Our
Web site management tools allow our editors to update our Web sites from remote
locations throughout the day.
PRODUCTS AND SERVICES
Floraplex contains specific trading systems for buying and selling
tailored to the different segments of the floriculture supply chain and an
information and communication portal providing
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comprehensive global industry news and information and Internet-based
communication tools. Our products and services within Floraplex include:
<TABLE>
<CAPTION>
PRODUCT/SERVICE AREA PRODUCT NAME PRODUCT DESCRIPTION
- -------------------- ------------ -------------------
<S> <C> <C>
Trading Systems Flower Purchase Network(TM) Dedicated trading systems for growers and importers of
Trade Link(TM)(1) floriculture products to sell to wholesalers. Users
can build "available for sale" inventory listings, schedule
their inventory according to an annual calendar, browse new
buyers, view purchase reports, and edit purchase points.
Supply Purchase Network Dedicated trading systems for manufacturers and suppliers of
hardgoods to sell to wholesalers. Users can build
"available for sale" inventory listings, browse new buyers,
view purchase reports, and edit purchase points.
Floramall A trading system specifically tailored for product sales by
the wholesaler to the retailer, providing 24-hour online
sales of product. Product enhancements include tools
designed to enhance marketing capabilities including
product catalogs and e-brochures. Technology tools also
provide wholesaler with the ability to load 'available for
sale' inventory. Wholesale florists can also pre-allocate
inventory for regular buying customers.
Florashops.com Primarily a trading system to facilitate retailer link into
Floramall and trading activities with the wholesale
florist. Specifically the product enables retail to
consumer transactions. A dedicated search engine allows
consumers to actively seek and find retailers by location
or desired product.
Information Floraplex Consolidated comprehensive resource for global industry news
content (including features, profiles, letters to the
editor), calendar of industry events, USDA market reports,
education links, product library and breeder's showcase,
web-casts, membership directory, and general world news
content.
Communications Floraplex Dedicated area for industry contact and communication
providing e-mail system, chat rooms, and message boards.
</TABLE>
- --------------------
(1) Trading system originally built for the Americas market. We plan to merge
our global trading systems technology as a single platform under the Flower
Purchase Network.
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The FreshPlex products and services are currently in the development
stage. We anticipate the component parts of FreshPlex will consist of the same
products and services as Floraplex excluding a B2C component similar to
Florashops.com. Due to the nature of the produce market, the FreshPlex trading
system will be a single product that incorporates all the participants in the
supply chain from the grower to the retailer.
SALES AND MARKETING
We have retained industry experts to assist in the overall
development, introduction, and implementation of our Global Trade Communities.
The following information regarding our sales and marketing operations pertains
primarily to Floraplex.
We currently sell Floraplex primarily through a direct sales force
that is actively targeting supply chain participants that have the largest
annual transaction volume, or turnover, and are the recognized leaders in the
European and the Americas market segments. As of December 31, 1999, we had 43
full-time employees in our sales and marketing organization.
As of December 31, 1999, we had 8 full-time employees in direct sales.
In addition to our direct sales efforts, we are developing a partnering program
with targeted supply chain participants and customers. We encourage these
partners to recommend our solutions to their customers. As of December 31,
1999, we had 3 employees dedicated to our partner program group.
Our technical consulting group directly supports our sales and
distribution efforts by providing technical consulting and integration
assistance to our current and prospective customers. As of December 31, 1999,
we had 6 full-time employees in our technical consulting group.
We believe that a high level of customer service and support is
critical to the successful marketing and sales of our Global Trade Communities.
We are building a comprehensive service and support organization to meet the
needs of our customers. As of December 31, 1999, we had 4 full-time employees
in our customer service and support organization and 6 full-time employees in
our product management organization. We are seeking to hire additional customer
service and support personnel as our customer base grows and as we introduce
new products and services.
To support our sales efforts and actively promote Floraplex and
FreshPlex, we conduct comprehensive marketing programs. Our marketing
strategies include an active public relations campaign, print advertisements,
online advertisements, trade shows, strategic partnerships and on-going
customer communications programs. We focus our marketing efforts on business
and trade publications, online media outlets, industry events and sponsored
activities. We participate in a variety of Internet, floriculture and produce
industry conferences and encourage our officers and employees to pursue
speaking engagements at these conferences. As of December 31, 1999, we had 20
full-time employees in our marketing organization.
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RESEARCH AND DEVELOPMENT
We recognize that strong product and service development capabilities
are a critical component of our strategic success. We believe the development
capability is essential for enhancing our technologies, developing or
integrating new applications for our Global Trade Communities, and maintaining
our competitiveness. We believe these development capabilities need to
represent internal resource strengths as well as selective sourcing of
strategic third party providers. We have invested and intend to continue to
invest a significant amount of human and financial resources in our research
and development organization and activities.
As of December 31, 1999, we had 14 full-time employees and 5
third-party professionals dedicated to our development efforts. Our development
team is primarily focused on developing and enhancing our Global Trade
Communities, as well as developing applications that advance our customer's
capability to integrate their internal systems to our Global Trade Communities,
and the functionality of our information content. We are currently in the
process of developing and integrating new technology or updated versions of
existing technology into our Global Trade Communities as part of our planned
release of product enhancements in 2000. Development expenditures were
approximately $7.6 million and $0.4 million in 1999 and 1998, respectively. Our
development costs include expenditures for third-party development and systems
integration organizations.
We expect to continue to commit significant resources to research and
development in the future. In 1998 all expenses for technology development were
expensed as incurred. In 1999 we capitalized $4.8 million of our technology
development costs in accordance with generally accepted accounting principles.
COMPETITION
The market for B2B e-commerce and Internet-based ordering and trading
is new, rapidly evolving, and intensely competitive. We expect competition to
increase both from existing competitors as well as new entrants, for various
components of our Global Trade Communities. We face competition from the
following areas:
o Other e-commerce companies;
o Traditional supply chain participants;
o Enterprise software companies that offer or develop an alternative
trading solution.
Competition from other B2B e-commerce companies in the produce market
segment is particularly extensive with between 8 to 10 organizations
specifically targeting the U.S. and European supply chains including Produce
Online, Buyproduce.com, DTN, World of Fruit.com and Produce World. Our
competition in the B2B component of the floriculture market segment includes
Flower Web as well as organizations competing in the B2C component such as:
FTD.com, 1-800-flowers.com, and Gerald Stevens, Inc. Competition may also
include B2C e-commerce companies seeking expanded revenue sources in the B2B
market.
We could face further competition in the future from traditional
supply chain participants that enter into B2B e-commerce with an Internet-based
trading system of their own or by partnering with other companies. Traditional
enterprise software companies such as IBM, Oracle, or SAP could in the future
develop and offer a competitive solution. Additionally, B2B e-commerce
companies currently focused on other industry segments could offer their
solutions in our targeted industries.
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Our current and potential competitors may develop Internet-based
trading solutions that are superior to our Global Trade Communities and achieve
greater market acceptance. Many of our current and potential competitors have
longer operating histories, greater name recognition, larger customer bases and
significantly greater financial resources as well as technical and marketing
capabilities. These competitors could adopt more aggressive pricing structures,
initiate more aggressive sales and marketing programs and make offers to
customers, strategic partners, employees or third parties with more
alternatives providing complementary supply chain solutions.
Consequently, we cannot be certain that we will be able to expand our
customer base and retain our existing customers. We may not be able to compete
successfully against our current or future competitors and competition could
have a material adverse effect on our business, financial condition and results
of operations.
INTELLECTUAL PROPERTY
We rely on copyright, trademark, and trade secret laws,
confidentiality agreements with employees and third parties, and license
agreements with consultants, vendors, and customers to protect our proprietary
technology. Despite such protections, a third party could, without
authorization, copy or otherwise appropriate information from our Global Trade
Communities. Our agreements with employees, consultants and others who
participate in development activities could be breached, we may not have
adequate remedies for any breach, and our trade secrets may otherwise become
known or independently developed by competitors.
We rely upon certain licenses from third parties for the majority of
our content and technology and may be required to license additional technology
in the future for use in managing our Global Trade Communities and providing
related services to our customers. There can be no assurance that these
third-party licenses will continue to be available to us on acceptable terms,
or at all. We do not, however, believe that we are dependent upon any single
licensor of technology or content.
We have applied for numerous trademarks, none of which have been
issued to date. We currently have pending applications for trademarks.
Generally, we cannot protect certain of our Web addresses for our Global Trade
Communities as trademarks due to the fact that they are too generic. The laws
of some foreign countries do not protect our proprietary rights to the same
extent as do the laws of the United States, and effective copyright, trademark
and trade secret protection may not be available in such jurisdictions.
There have been substantial amounts of litigation in the computer
industry regarding intellectual property assets. Third parties may claim
infringement by us with respect to current and future products, trademarks or
other proprietary rights, or we may counterclaim against such parties in such
actions. Any such claims or counterclaims could be time-consuming, result in
costly litigation, diversion of management's attention, cause product release
delays, require us to redesign our products or require us to enter into royalty
or licensing agreements, any of which could have a material adverse effect upon
our business, financial condition and operating results. Such royalty and
licensing agreements, if required, may not be available in terms acceptable to
us, or at all.
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EMPLOYEES
As of December 31, 1999, we had a total of 95 full-time employees
worldwide. We expect to hire additional employees in 2000. We believe our
relations with our employees are good. Our future success will depend, in part,
on our ability to attract, retain and motivate highly qualified technical,
sales and marketing, and management personnel, for whom competition is intense.
CORPORATE HISTORY AND DEVELOPMENT
o The Floral Foundation, Inc., or FFI, was incorporated in the State
of Florida on March 30, 1994.
o From its inception, FFI conducted limited activities related to
importing fresh cut flowers.
o In July 1996, FFI changed its name to World Commerce Online, Inc.
which we refer to as WCO Florida.
o On August 23, 1989, we were incorporated in the State of Nevada, and
our initial name was "Sunrise Express, Inc."
o On September 10, 1998, we entered into a voluntary share exchange
with the stockholders of WCO Florida, whereby WCO Florida became our
wholly-owned Florida subsidiary.
o Pursuant to the share exchange, we issued 7,020,000 shares of our
common stock to the stockholders of WCO Florida for their 7,020,000
outstanding shares of common stock.
o In September 1998, we changed our name to "World Commerce Online,
Inc." and in March 1999, WCO Florida changed its name to World
Commerce Online-Floraplex, Inc.
o We have acquired all the intellectual property rights and other
assets from World Commerce Online-Floraplex in exchange for the
assumption of its liabilities.
o We have since licensed the technology back to World Commerce
Online-Floraplex.
o We commenced operations of Floraplex in the third quarter of 1999.
o In October 1999, we changed our state of incorporation from the
State of Nevada to the State of Delaware.
RISK FACTORS
Before you invest in our common stock, you should be aware of various
risks described below and carefully consider these risk factors, together with
all of the other information included in this registration statement, before
you decide whether to purchase shares of our common stock.
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RISKS SPECIFIC TO WORLD COMMERCE
BECAUSE WE HAVE A LIMITED OPERATING HISTORY, THERE IS LIMITED
INFORMATION UPON WHICH TO BASE AN INVESTMENT DECISION
We did not commence substantive operations until after our share
exchange with World Commerce Online-Floraplex in September 1998. As a result of
our limited operating history, we have limited meaningful historical financial
data that can be used in evaluating our business and prospects and in
projecting future operating results.
WE HAVE A HISTORY OF OPERATING LOSSES AND CANNOT GUARANTEE THAT WE
WILL EVER BE PROFITABLE
We have incurred annual losses from operations since our inception,
and we expect to continue to incur losses from operations on both a quarterly
and an annual basis for the foreseeable future. We had operating losses of
approximately $12.6 million during fiscal year 1999. At December 31, 1999, we
had an accumulated deficit of approximately $45.4 million. Our business is
still in the development stage, and revenue and income potential from our
business is unproven, making an evaluation of us and our prospects difficult.
There can be no assurance that our revenues will significantly increase or that
we will achieve or maintain profitability or generate cash from operations in
future periods.
FLUCTUATIONS IN OUR OPERATING RESULTS COULD LEAD TO DECREASES IN OUR
STOCK PRICE
As a result of our limited operating history and the emerging nature
of the markets in which we compete globally, we believe that our operating
results may fluctuate materially, as a result of which quarter-to-quarter
comparisons of our results of operations may not be meaningful. If our future
operating results materially fluctuate or are below the expectations of stock
market analysts our stock price would likely decline. Factors that may cause
our results of operations to fluctuate, including the following:
o The amount and timing of operating costs and capital expenditures
relating to expansion of our business, operations, and
infrastructure;
o The announcement or introduction of new services and products by us
or our competitors;
o Price competition or higher prices in the industry;
o Pricing of hardware and software required for the transaction of
e-commerce;
o The level of use of the Internet and online services and the rate of
market acceptance of the Internet and other online services for
transacting commerce;
o Our ability to upgrade and develop our systems and infrastructure in
a timely and effective manner;
o Our ability to attract, train, and retain skilled management, as
well as technical, and creative professionals;
o Unanticipated economic and political difficulties related to
operating in foreign markets;
o Unanticipated technical, legal, and regulatory difficulties with
respect to use of the Internet; and
o General economic conditions and economic conditions specific to
Internet technology usage and electronic commerce.
As a result of these and other factors, we believe that
period-to-period comparisons of our historical results of operations are not a
good predictor of our future performance.
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DUE TO THE SEASONALITY OF THE PERISHABLE PRODUCTS INDUSTRIES OUR
REVENUES MAY BE SUBJECT TO FLUCTUATIONS OR THE RESULTS OF OUR OPERATIONS MAY
SUFFER
Supply of product and the related execution of purchase transactions
by participants in the perishable products industries are impacted by seasonal
influences including weather and demand. As a result of this seasonality, our
revenues may fluctuate significantly. In addition, due to the fixed nature of
some of our expenses, fluctuations in revenue due to seasonality may adversely
impact our interim results of operations.
OUR FUTURE GROWTH AND THE GENERATION OF REVENUE DEPENDS ON THE SUCCESS
OF OUR GLOBAL TRADE COMMUNITIES
Floraplex and FreshPlex may not achieve widespread market acceptance.
Failure of our current and planned Global Trade Communities to operate as
anticipated could delay or prevent their adoption by our customer base. If our
targeted customers do not adopt our Global Trade Communities and successfully
implement our trading systems, our revenue will not grow significantly and our
business prospects will suffer.
THE LONG AND VARIABLE SALES CYCLE OF OUR GLOBAL TRADE COMMUNITIES MAY
CAUSE REVENUE AND OPERATING RESULTS TO VARY OR IMPAIR OUR ABILITY TO GENERATE
REVENUES
A key element of our business plan is to market our Global Trade
Communities directly to supply chain participants, and to succeed we must often
satisfy senior management, the information technology groups and the
procurement personnel who would utilize our Global Trade Communities. The sale
and implementation of our Global Trade Communities are subject to delays due to
our customers' internal budgeting, procedures for approving capital
expenditures and deploying new technologies. We devote significant sales,
marketing and management resources to the sales process without any assurance
that the customer will use our Global Trade Communities. The delays associated
with our sales cycle could impair our ability to generate revenue.
WE MAY NOT INCREASE OUR REVENUES IF PROCUREMENT PERSONNEL WITHIN OUR
CUSTOMERS DO NOT USE THE TRADING SYSTEM WITHIN OUR GLOBAL TRADE COMMUNITIES
Our revenues are primarily derived from purchase transactions of
perishable product by our customers. The customers' personnel responsible for
procuring product may or may not use our trading systems to purchase their
perishable products. Even if we successfully maintain existing customers and
add new customers, we may not be able to increase revenues if our customers'
procurement personnel do not use the trading systems. Our efforts to attract
customers and to increase their use of our trading systems may not be
successful, which would limit our ability to generate revenues from these
customers.
IF WE DO NOT MAINTAIN AND EXPAND OUR SUPPLIER BASE, THE AVAILABILITY
AND VARIETY OF PRODUCT WILL BE DIMINISHED AND OUR BUSINESS WILL SUFFER
Our success depends upon the availability of product and product
variety in our trading systems. To increase the breadth of the products offered
on our trading systems we must establish relationships with suppliers,
including growers, manufacturers and wholesalers. Potential suppliers may view
us as detrimental to their business, since they technically compete with us for
sales and for customers. If we fail to have products from suppliers or if a
significant number of suppliers do not maintain and increase their offered
inventory of product, use of our trading systems and our revenues will
decrease.
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WE CURRENTLY RELY ON A LIMITED NUMBER OF CUSTOMERS, AND ANY LOSS OF A
CUSTOMER COULD HAVE A NEGATIVE EFFECT ON OUR REVENUES
We expect that for the foreseeable future we will generate a
significant portion of our revenues from a limited number of customers.
Furthermore, our customers are not obligated to use our trading systems
exclusively or for any minimum number of transactions or dollar amounts. We
currently do not offer all of the products required by our customers, and we
expect that our customers will continue to use multiple sources to meet their
needs. Our customers may discontinue use of our trading systems at any time
without significant financial penalty. If we lose any of our customers, or if
we are unable to add new customers, we could lose a number of our product
suppliers and our revenues will not increase as expected.
IF OUR SUPPLIERS DO NOT PROVIDE TIMELY AND PROFESSIONAL DELIVERY OF
PRODUCTS TO OUR CUSTOMERS OUR BUSINESS WILL BE HARMED
If our suppliers do not deliver products to our customers in a manner
that ensures quality and timeliness, then we will not meet customer
expectations and our reputation and brand will be damaged. In addition,
deliveries that are nonconforming, late or are not accompanied by information
required by applicable law or regulations, could expose us to liability or
result in decreased adoption and use of our trading systems, which could have a
negative effect on our business.
OUR SALES AND MARKETING STRATEGY HAS NOT BEEN TESTED AND MAY NOT
RESULT IN SUCCESS
Our sales and marketing efforts have been largely untested in the
marketplace, and may not result in sales of our products and services. To
penetrate our market, we will have to exert significant efforts and incur
significant costs to create awareness of, and demand for, our Global Trade
Communities. Our failure to further develop our marketing capabilities and
successfully market our Global Trade Communities could have a negative effect
on our business.
IF WE ARE PERCEIVED AS FAVORING ONE SUPPLIER OVER ANOTHER, WE MAY BE
UNABLE TO ATTRACT SUFFICIENT CUSTOMERS TO OUR GLOBAL TRADE COMMUNITIES, WHICH
WOULD HAVE A NEGATIVE IMPACT ON OUR REVENUES
The perishables product markets consist of complex relationships among
growers, manufacturers, wholesalers and retailers. Adoption of our Global Trade
Communities by our customers is dependent on their perception that we provide a
neutral, impartial trading community to buy and sell perishable products. To
the extent that we are perceived by our customers as favoring one supplier over
another, customers may lose confidence in our Global Trade Communities as an
impartial trading community and choose alternative solutions. Our strategic
relationships may compromise the perception that we provide a neutral and
impartial trading community. Any bias, whether perceived or actual, could have
a negative impact on our ability to maintain or increase our customer base
resulting in reduced revenues and therefore having a negative impact on our
business.
WE FACE INTENSE COMPETITION THAT COULD LIMIT OUR ABILITY TO EXPAND OUR
BASE OF CUSTOMERS
In the market for B2B e-commerce competition is intense and is
expected to increase significantly in the future. Our competitors and potential
competitors may develop superior Internet purchasing solutions that achieve
greater market acceptance than our solution. In addition, substantially
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<PAGE> 25
all of our prospective customers have established long-standing relationships
with some of our competitors or potential competitors, including most of our
suppliers. Accordingly, we cannot be certain that we will be able to expand our
customer base, or retain our current customers or suppliers. Consequently, we
may not be able to compete successfully against our current or future
competitors and competition could have a negative effect on our business. See
"Business -- Competition in our Industry."
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS THAT COULD HARM
OUR BUSINESS
To be successful, we must expand our operations internationally. We
are increasingly subject to a number of risks associated with international
business activities which may decrease our revenue, increase our costs,
lengthen our sales cycle or require significant management attention. These
risks include:
o Inability to adapt to multiple cultural environments and therefore
to achieve expanded sales and marketing activities;
o Ability to understand and adapt to diverse business standards;
o Increased expenses associated with sales and marketing activities in
foreign countries;
o General economic conditions in international markets;
o Currency exchange rate fluctuations;
o Unexpected changes in regulatory requirements in foreign countries
resulting in unanticipated costs and delays;
o Tariffs, export controls and other trade barriers;
o Longer accounts receivable payment cycles and difficulties in
collecting accounts receivable;
o Potentially adverse tax consequences, including restrictions on the
repatriation of earnings; and
o Risks related to global economic turbulence and adverse economic
circumstances.
OUR BUSINESS MAY SUFFER IF WE FAIL TO MANAGE OUR GROWTH
Failure to effectively manage our growth could impair our ability to
execute our business strategy. Rapid growth of our business may place a strain
on our management, operations and financial systems. The evolution of our
operations in 1999 has resulted in a significant increase in number of
employees from 18 at January 1, 1999 to 95 at January 1, 2000. We expect to
continue to increase the number of employees as our business grows, and may
expand operations to locations other than those in which we currently operate.
Continued growth is likely to place a greater burden on our operating
and financial systems as well as our senior management and other personal.
Existing and new members of management may not be able to improve existing
systems and controls or implement new systems and controls in response to
anticipated growth. Management of our operations in diverse locations may also
complicate the task of managing our growth.
BECAUSE WE DEPEND UPON A SINGLE SITE FOR OUR COMPUTER AND
COMMUNICATIONS SYSTEMS, WE ARE MORE VULNERABLE TO THE EFFECTS OF NATURAL
DISASTERS, COMPUTER VIRUSES, AND SIMILAR DISRUPTIONS
Our ability to successfully process transactions and provide
high-quality customer service largely depends on the efficient and
uninterrupted operation of our computer and communications hardware and
software systems. Our proprietary and licensed software resides solely on our
servers, all of which, as well as all of our communications hardware, are
located in a monitored server facility in
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Philadelphia, Pennsylvania. Our systems and operations are in a secured
facility with hospital-grade electrical power, redundant telecommunications
connections to the Internet backbone, uninterruptible power supplies, and
generator back-up power facilities. In addition, we maintain redundant systems
for backup and disaster recovery. Despite these safeguards, we remain
vulnerable to damage or interruption from fire, flood, power loss,
telecommunications failure, break-ins, and similar events. In addition, we do
not, and may not in the future, carry sufficient business interruption
insurance to compensate us for losses that may occur.
WE MAY FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY AND,
THEREFORE, LOSE OUR COMPETITIVE ADVANTAGE
To compete effectively we depend upon our ability to maintain the
proprietary nature of our software and the proprietary software of others with
which we have entered into software licensing agreements. We hold no patents
and rely on a combination of trade secrets and copyright laws, nondisclosure
and other contractual agreements and technical measures to protect our rights
in our proprietary technology. There can be no assurance that these laws will
provide sufficient or complete protection to us, that others will not develop
technologies that are similar or superior to ours, or that third parties will
not copy or otherwise obtain and use our technologies without authorization.
Policing unauthorized use of our proprietary technology and other intellectual
property rights could entail significant expense and could be difficult or
impossible, particularly given the global nature of the Internet and the fact
that the laws of other countries may provide us little or no effective
protection of our intellectual property. See "Business -- Intellectual
Property."
IF WE ARE UNABLE TO UPGRADE OUR TECHNOLOGY AND INFRASTRUCTURE, WE MAY
BE UNABLE TO PROCESS AN INCREASED VOLUME OF TRANSACTIONS
A key element of our strategy is to provide a cost-effective means by
which our customers can execute B2B e-commerce transactions. If the volume of
transactions increases beyond our estimates, we will have to expand and further
upgrade our technology and infrastructure to accommodate these increases. If we
are unable to effectively upgrade and expand our technology and infrastructure,
our systems may suffer from the following:
o Unanticipated system disruptions;
o Slower response times;
o Degradation in levels of customer service;
o Impaired quality and speed of transaction processing; and
o Delays in reporting accurate financial information.
If our systems experience difficulties due to our inability to
effectively upgrade and expand our technology and infrastructure, our revenues
will decrease and our business will suffer.
WE MAY BE HELD LIABLE FOR ONLINE CONTENT PROVIDED BY THIRD PARTIES
We may face potential liability for defamation, negligence, copyright,
patent, or trademark infringement and other claims based on the nature and
content of the materials that appear on our Global Trade Communities. Although
we carry general liability insurance, our insurance may not cover all claims or
may not be adequate to indemnify us for any liability that may be imposed. Any
imposition of
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<PAGE> 27
liability, particularly liability that is not covered by insurance or is in
excess of our insurance coverage, could have a material adverse effect on our
brand and our business.
OUR EXECUTIVE OFFICERS AND KEY PERSONNEL ARE CRITICAL TO OUR BUSINESS,
AND THESE OFFICERS AND PERSONNEL MAY NOT REMAIN WITH US IN THE FUTURE
We depend upon the continuing contributions of our key management,
sales and product development personnel. The loss of any of these personnel
could seriously harm us. Although some of our officers are subject to employment
agreements, we cannot be sure that we will retain their services. In addition,
we are the sole beneficiary of key person life insurance in the amount of $1
million on the life of Robert Shaw, our Chairman of our board of directors and
our Chief Executive Officer. See "Executive Compensation -- Employment
Agreements."
WE HAVE LIMITED HUMAN RESOURCES; WE NEED TO ATTRACT AND RETAIN HIGHLY
SKILLED PERSONNEL
Our future success will depend in large part on our ability to
attract, train, and retain additional highly skilled executive level
management, creative, technical, and sales personnel. Competition is intense
for these types of personnel from other technology companies and more
established organizations, many of which have significantly larger operations
and greater financial, marketing, human, and other resources than we have. We
may not be successful in attracting and retaining qualified personnel on a
timely basis, on competitive terms, or at all. The inability to attract and
retain qualified personnel could make it more difficult to develop our products
and execute our business strategy.
OUR STOCK MAY BE THINLY TRADED OR VOLATILE, WHICH MIGHT MAKE IT HARD
FOR INVESTORS TO SELL THEIR SHARES AT A PREDICTABLE PRICE, OR AT ALL
As of December 31, 1999, our stock traded on the OTC Bulletin Board,
with only approximately 4.4 million shares of stock or approximately 29% of our
outstanding common stock in the public float. Because we have such a small
number of shares actually trading in the public market, the market price of our
common stock may fluctuate significantly in response to the following factors,
some of which are beyond our control:
o Variations in our quarterly operating results;
o Changes in financial estimates of our revenues and operating results
by securities analysts;
o Announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
o Loss of or decrease in sales to a major customer or failure to
complete significant transactions;
o Additions or departures of key personnel;
o Future sales of our common stock, including sales which dilute
existing investors; Stock market price and volume fluctuations
attributable to inconsistent trading volume levels of our stock;
o General stock market conditions;
o Commencement of or involvement in litigation; and
o Announcements by us or our competitors of key innovations or product
introductions.
Accordingly, you may have difficulty selling your shares of common stock at a
price that is attractive to you.
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WE MAY NEED TO RAISE ADDITIONAL CAPITAL WHICH MIGHT NOT BE AVAILABLE
OR WHICH, IF AVAILABLE, MIGHT ONLY BE AVAILABLE IN TERMS ADVERSE TO OUR CURRENT
STOCKHOLDERS
We expect that our current cash and cash equivalents and cash from
current arrangements to sell equity securities will meet our working capital
and capital expenditure needs for at least one year. We may need to raise
additional funds and we cannot be certain that we will be able to obtain
additional financing on favorable terms, if at all. Further, if we issue equity
securities, the ownership percentage of our stockholders will be reduced, and
the new equity securities may have rights, preferences or privileges senior to
those of existing holders of our common stock. If we cannot raise needed funds
on acceptable terms, we may not be able to develop new services or enhance our
current services, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements, which could seriously harm
our business, operating results and financial conditions.
WE HAVE ANTI-TAKEOVER PROVISIONS THAT COULD PREVENT AN ACQUISITION OF
OUR COMPANY
Some provisions of our certificate of incorporation and the provisions
of Delaware law may be deemed to have anti-takeover effects and may delay,
defer or prevent a takeover attempt of us. We are subject to the "business
combination" provisions of the Delaware General Corporation Law. These
provisions prohibit a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years following the date the person became an interested stockholder, unless
the "business combination" or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Also, our
certificate of incorporation authorizes the issuance of up to 10,000,000 shares
of preferred stock with such rights and preferences as may be determined from
time to time by the board of directors, of which 640,000 shares remain without
designation and available for issuance as of December 31, 1999. We include such
preferred stock in our capitalization in order to enhance our financial
flexibility. However, the issuance of large blocks of preferred stock may have
a dilutive effect with respect to existing holders of our common stock.
WE DO NOT PLAN TO PAY CASH DIVIDENDS
Holders of our common stock are entitled to cash dividends when, as
and if declared by the board of directors out of funds legally available for
the payment of dividends. We have never paid dividends and our management does
not anticipate the declaration or payments of any dividends in the foreseeable
future. We intend to retain earnings, if any, to finance the development and
expansion of our business. Our future dividend policy will be subject to the
discretion of our board of directors and will be contingent upon future
earnings, if any, our financial condition, capital requirements, general
business conditions and other factors. Therefore, there can be no assurance
that cash dividends of any kind will ever be paid.
RISKS SPECIFIC TO OUR INDUSTRY
INTERNET SECURITY POSES RISKS TO OUR ENTIRE BUSINESS
The processing of B2B e-commerce transactions by means of our
technology and infrastructure involves the transmission and analysis of
confidential and proprietary information of our customers, as well as our own
confidential and proprietary information. We rely on encryption and
authentication technology licensed from other companies to provide the security
and authentication necessary to effect secure Internet transmission of
confidential information, such as credit information and proprietary consumer
information. Advances in computer capabilities, new discoveries in the field of
cryptography,
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<PAGE> 29
or other events or developments may result in a compromise or breach of the
technology used by us to protect client transaction data. Anyone who is able to
circumvent our security measures could misappropriate proprietary information
or cause interruptions in our operations, as well as the operations of the
merchant. We may be required to expend significant capital and other resources
to protect against security breaches or to minimize problems caused by security
breaches. Concerns over the security of the Internet and other B2B e-commerce
transactions and the privacy of consumers and merchants may also inhibit the
growth of the Internet and other online services generally, especially as a
means of conducting commercial transactions. To the extent that our activities
or the activities of others involve the storage and transmission of proprietary
information, security breaches could damage our reputation and expose us to a
risk of loss or litigation and possible liability. Our security measures may
not prevent security breaches. The compromise of our security or
misappropriation of proprietary information could harm our business.
OUR SUCCESS DEPENDS ON THE INTERNET'S ABILITY TO ACCOMMODATE GROWTH IN
B2B E-COMMERCE
The use of the Internet for retrieving, sharing and transferring
information among businesses, buyers, suppliers and partners has only recently
begun to develop. If the Internet were not able to accommodate growth in B2B
e-commerce, our business would suffer. The recent growth in the use of the
Internet has caused frequent periods of performance degradation. Our ability to
sustain and improve our services is limited, in part, by the speed and
reliability of the networks operated by third parties. Consequently, the
emergence and growth of the market for our services is dependent on
improvements being made to the Internet infrastructure to alleviate overloading
and congestion.
A LACK OF DEVELOPMENT OF THE B2B E-COMMERCE MARKET WOULD NEGATIVELY
AFFECT US
If the B2B e-commerce market does not grow or grows more slowly than
expected, our business will suffer. The possible slow adoption of the Internet
as a means of commerce by businesses may harm our prospects. A number of
factors could prevent the acceptance and growth of B2B e-commerce, including
the following:
o B2B e-commerce is at an early stage and buyers may be unwilling to
shift their traditional purchasing to online purchasing;
o Businesses may not be able to implement B2B e-commerce applications
on these networks;
o Increased government regulations or taxation may adversely affect
the viability of e-commerce;
o Insufficient availability of telecommunication services or changes
in telecommunication services may result in slower response times;
and
o Adverse publicity and consumer concern about the reliability, cost,
ease of access, quality of services, capacity, performance and
security of B2B e-commerce transactions could discourage its
acceptance and growth.
Even if the Internet is widely adopted as a means of commerce, the
adoption of our network for procurement, particularly by companies that have
relied on traditional means of procurement, will require broad acceptance of
the new approach. In addition, companies that have already invested substantial
resources in traditional methods of procurement, or in-house e-commerce
solutions, may be reluctant to adopt our B2B e-commerce solution.
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WE MUST BE ABLE TO ADAPT TO THE TECHNOLOGICAL CHANGES INHERENT IN THE
INTERNET, AND B2B E-COMMERCE, OR OUR BUSINESS WILL BE HARMED
The Internet, B2B e-commerce, and the B2B e-commerce services industry
are characterized by:
o Rapid technological change;
o Changes in customer requirements and preferences;
o Frequent new product and service introductions embodying new
technologies; and
o The emergence of new industry standards and practices that could
render proprietary technology and hardware and software
infrastructure obsolete.
Our failure to respond in a timely manner to changing market
conditions or customer requirements would have a negative impact on our
business prospects.
Our success will depend, in part, on our ability to:
o Enhance and improve the responsiveness and functionality of our
trading systems;
o License or develop technologies useful in our business on a timely
basis;
o Enhance our existing services, develop new services and technology
that address the increasingly sophisticated and varied needs of our
prospective or current customers;
o Develop technology that is accepted by our customers and the
targeted industries;
o Respond to technological advances and emerging industry standards
and practices on a cost-effective and timely basis; and
o Develop technology that will integrate with our customer's
information systems.
We cannot be certain that we will be successful at enhancing existing
or integrating new technology into our Global Trade Communities. If we are
unable to adapt our technology in a cost-effective manner and on a timely
basis, we may lose customers or experience difficulty obtaining new customers
which would negatively impact revenues and our business.
REGULATORY AND LEGAL UNCERTAINTIES SURROUND THE DEVELOPMENT OF THE
INTERNET
We are not currently subject to direct regulation by any government
agency other than laws or regulations applicable to business and generally to
B2B e-commerce directly. However, due to the increasing popularity and use of
the Internet and other online services, federal, state, and local governments
may adopt laws and regulations, or amend existing laws and regulations, with
respect to the Internet or other online services covering issues such as user
privacy, pricing, sales tax, content, copyrights, distribution, and
characteristics and quality of products and services. Furthermore, the growth
and development of the market for B2B e-commerce may prompt calls for more
stringent consumer protection laws to impose additional burdens on companies
conducting business over the Internet. The adoption of any additional laws or
regulations may decrease the growth of the Internet or other online services,
which could, in turn, decrease the demand for our services and increase our
cost of doing business, or otherwise have a negative effect on our business.
Moreover, the relevant governmental authorities have not resolved the
applicability to the Internet and other online services of existing laws in
various jurisdictions governing issues such as property ownership, sales tax,
libel and personal privacy and it may take time to resolve these issues
definitively.
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The tax treatment of the Internet and e-commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by some foreign governments that could impose taxes on the sale of
goods and services and other internet activities. In October 1998, the Internet
Tax Freedom Act was signed into law, placing a three year moratorium on new
state and local taxes on e-commerce. However, it is possible that future laws
imposing taxes or other regulations on e-commerce could substantially impair
the growth of e-commerce and as a result have a negative effect on our
business.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements, trend analyses and other information contained in this
registration statement regarding markets for our products and trends in net
revenues, gross margin and anticipated expense levels, and any statement that
contains the words "anticipate," "believe," "plan," "estimate," "expect,"
"should," "intend" and other similar expressions, constitute forward-looking
statements. These forward-looking statements are subject to business and
economic risks, including those risks identified in "Risk Factors" and
elsewhere in this registration statement and our actual results of operations
may differ significantly from those contained in the forward-looking statements
because of those risks. The cautionary statements made in this registration
statement apply to all forward-looking statements wherever they appear in this
registration statement.
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ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction
with our consolidated financial statements and related notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other financial data included elsewhere in this registration
statement. The selected financial data for the period from inception (March 30,
1994) to December 31, 1999 are derived from financial statements audited by
PricewaterhouseCoopers, LLP, our independent auditors and are included
elsewhere in this registration statement. Operating results for the year ended
December 31, 1999 are not necessarily indicative of the results that may be
expected for any other period.
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
YEAR ENDED YEAR ENDED (MARCH 30, 1994) TO
DECEMBER 31, 1999 DECEMBER 31, 1999 DECEMBER 31, 1999
----------------- ----------------- ---------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................................ $ 43,130 $ 292,406 $ 775,929
Operating expenses:
Cost of floral products..................... - - 308,749
Product and technology development.......... 2,884,727 381,192 3,470,606
Sales and marketing......................... 5,250,884 316,966 5,834,021
General and administrative.................. 3,848,221 3,223,123 7,932,957
Depreciation and amortization............... 474,106 7,401 485,224
------------ ----------- ------------
Total costs and operating expenses.... 12,457,938 3,928,682 18,031,557
------------ ----------- ------------
Loss from operations........................... $(12,414,808) $(3,636,276) $(17,255,628)
Net interest expense........................... 166,129 4,026 177,113
Net loss....................................... $(12,637,524) $(3,590,302) $(17,439,328)
Deemed dividend on redeemable convertible
preferred stock............................. (28,000,000) -
Net loss available to common stockholders...... $(40,637,524) $(3,590,302)
Basic and diluted net loss per common share.... $(2.66) $(0.39)
Weighted average number of shares outstanding.. 15,271,152 9,181,923
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------
1999 1998
----------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................ $10,553,021 $ 42,335
Working capital...................................................... 12,271,904 (174,695)
Total assets......................................................... 22,721,727 101,244
Long-term liabilities................................................ 91,927 26,983
Redeemable convertible preferred stock............................... 27,598,983 -
Total stockholders' deficit.......................................... $(7,268,054) $ (144,366)
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with "Selected Financial Data," and the consolidated financial statements and
the notes to those statements that appear elsewhere in this registration
statement. The following discussion and analysis contains forward-looking
statements that reflect our plans, estimates and beliefs. Our actual results
could differ from those discussed in the forward-looking statements. Factors
that could cause or contribute to any differences include, but are not limited
to, those discussed below and elsewhere in this registration statement,
particularly in "Risk Factors."
OVERVIEW
We provide global B2B e-commerce solutions to the perishable products
industries providing trading systems, comprehensive industry-specific
information resources and Internet-based communication tools. Our Global Trade
Communities, including Floraplex and FreshPlex, which we market to supply chain
participants and other businesses with an Internet focus, deliver our
customers' web-enabled procurement tools and an industry-specific Internet
portal.
Since our inception, we have incurred significant losses, and as of
December 31, 1999, we had an accumulated deficit of $45.4 million. We have not
achieved profitability on a quarterly or an annual basis, and anticipate that
we will continue to incur net losses for the foreseeable future. We expect to
incur significant costs for technology development, sales and marketing, and
general and administrative expenses and, as a result, we will need to generate
significant revenue to achieve and maintain profitability.
We are in the early stage of operations and, as a result, the
relationships between revenue, cost of revenue, and operating expenses
reflected in the financial information included in this registration statement
do not represent future expected financial relationships. Much of the cost of
revenue and operating expenses reflected in our financial statements represent
salaries and related personnel costs including stock-based compensation and
other costs which are impacted by revenue growth and expanding operations. We
expect that these expenses will increase with the escalation of sales and
marketing activities and transaction volumes, but at a much slower rate of
growth than the corresponding revenue increase. Accordingly, we believe that,
at our current stage of operations, period to period comparisons of results of
operations are not meaningful.
The formulation of our B2B e-commerce strategy and business model
occurred in the second half of 1998. Consequently, we consider the period from
January 1998 to December 31, 1999 as the period representing meaningful
operating results for this discussion and analysis. Prior to this period, we
generated revenue and incurred costs in connection with importing and resale of
fresh cut flowers from 1994 through December 31, 1996. In the year ended
December 31, 1997, and the first several months of 1998, we also generated
revenue from the development of Internet web-sites for companies under the
control of one of our senior executives. We do not intend to generate revenues
from these sources in the future and therefore believe any reference to these
prior periods or elements of 1998 not associated with our B2B e-commerce
strategy for purposes of our discussion and analysis would not provide
meaningful information regarding our operations and our underlying strategy and
business model.
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During the period from inception to the year ended December 31, 1996, we
generated approximately $0.4 million in floral product revenue relating to the
sale of imported fresh cut flowers. We do not intend to have revenues generated
from these activities in any future period.
We intend to derive our revenue from B2B e-commerce sales transactions
of perishable product on our trading systems with fees typically ranging from
2% to 8% of transaction order value in the floriculture market and 1% to 5% of
transaction order value in the produce market and its related industry
suppliers. We also intend to derive revenue from advertisement and sponsorship
in our Global Trade Communities. We will record advertising revenues at the
time advertisements are displayed and will record sponsorship revenues ratably
over the period of sponsorship. We also intend to derive revenue from monthly
subscription fees. In the future, we may also derive revenue from one-time
implementation fees which would be recognized ratably over the period of the
related implementation. Also in the future we may derive license fees for the
development of private trade communities in lieu of transaction and
subscription fees.
The revenue we generated in 1999 was derived equally from customers
based in the United States and Europe. We expect that revenue from customers
based outside the United States will increase in future periods.
Cost of floral product sales consists of costs incurred to acquire
imported fresh cut flower product. These costs were incurred in 1994 through
1996 prior to the formulation and commencement of our B2B e-commerce model. We
do not intend to have similar costs in any future period.
Product and technology development expenses consist primarily of
salaries and related personnel costs for our internal development team and costs
related to the design, development, testing, deployment and enhancement of our
Global Trade Community technology and our Web-server infrastructure including
costs for third party consultants. We expensed our development costs as they
were incurred in 1998. During the year ended December 31, 1999, we capitalized
$4.8 million of costs incurred in the development of our technology in
accordance with the AICPA's Statement of Position No. 98-1 "Accounting for the
Cost of Computer Software Developed or Obtained for Internal Use." We believe
that research and development is critical to our strategic product development
objectives and we intend to enhance our technology to meet the changing
requirements of the market and advancements in functionality. As a result, we
expect our product and technology development expenses to increase in the
future.
Sales and marketing expenses consist primarily of salaries and related
personnel costs including stock-based compensation for our sales and marketing
organization and marketing costs for activities including advertisements and
trade shows. We expect that sales and marketing expenses will increase in the
future as we hire additional personnel, expand our operations globally,
initiate additional marketing programs, establish sales offices in new
locations worldwide and incur additional costs related to the growth of our
business and our operations.
General and administrative expenses consists primarily of salaries and
related costs of operations and finance personnel including stock-based
compensation as well as costs for our operating facilities, recruiting
expenses, professional fees and telecommunication costs. We expect that our
general and administrative expenses will increase in the future as we hire
additional personnel, expand our operations domestically and internationally
and incur additional costs related to the growth of our business and our
operations as a public company.
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In February 1999, we entered into a private placement of our Series A
redeemable convertible preferred stock which provided proceeds of approximately
$8 million net of transaction costs. We used the proceeds from this
transaction to begin hiring personnel in all areas, to begin a significant
advertising and branding campaign and to continue design and development of our
technology products and infrastructure. Additionally, we completed the private
placement of our Series B redeemable convertible preferred stock in October
1999, which provided proceeds of approximately $19.6 million net of transaction
costs. The proceeds from the Series B private placement were also reduced by
$2.4 million relating to the conversion of a bridge loan provided by ITP prior
to completion of the Series B transaction.
We completed the acquisition of the Flower Purchase Network in August
1999. The aggregate purchase price for this acquisition was approximately $1.5
million, primarily paid for in our common stock and the assumption of
approximately $0.3 million in debt. Although the acquisition involved an
established B2B e-commerce trading platform with user traffic, the trading
system had minimal revenues associated with them prior to our acquisition. The
acquisition was accounted for under the purchase method of accounting.
We have a limited operating history and have incurred losses in every
quarter of operations. Our accumulated deficit as of December 31, 1999 was $45.4
million and we expect to continue to incur losses as we build brand identity and
technology infrastructure to allow us to maintain our position as a leader in
the B2B e-commerce market for the perishable products industries.
In view of the rapidly evolving nature of our business and its limited
operating history, we believe that period-to-period comparisons of our
operating results, including our gross profit and operating expenses as a
percentage of net sales, are not necessarily meaningful and should not be
relied upon as an indication of future performance. See "Risk
Factors--Fluctuations In Our Operating Results May Affect Our Stock Price."
RESULTS OF OPERATIONS
The following is derived from our audited consolidated financial
statements.
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
REVENUES. Revenue for the year ended December 31, 1999 was $0.04
million. Revenue was generated primarily from transaction revenue and from the
number of advertisers that displayed advertisements on our sites.
PRODUCT AND TECHNOLOGY DEVELOPMENT. Product and technology development
expenses consist primarily of payroll and benefits for employees dedicated to
the design and maintenance of our technology infrastructure a well as for
employees involved in the aggregation and editing of content for our sites.
Product and technology development expenses also include fees paid to content
providers and connectivity costs for our network. Product and technology
development expenses for the year ended December 31, 1999 increased by
approximately $2.5 million over the year ended December 31, 1998. The primary
reason for this increase was the increase in headcount from 6 as of December
31, 1998 to 29 as of December 31, 1999.
SALES AND MARKETING. Sales and marketing expenses for the year ended
December 31, 1999 increased by approximately $4.9 million over the year ended
December 31, 1998. The primary reason
33
<PAGE> 36
for this increase was the launch of our domestic and international branding
campaign which included advertisements in several industry and trade
publications, and participation at trade shows worldwide. Additionally, our
sales and marketing department increased from 5 employees as of December 31,
1998 to 43 employees as of December 31, 1999.
GENERAL AND ADMINISTRATIVE. General and administrative expenses for
the year ended December 31, 1999 increased by approximately $0.6 million over
the year ended December 31, 1998. The primary reason for this increase was the
hiring of personnel in all support departments, the cost of professional fees
particularly audit, tax and legal as well as travel costs. Our headcount
increased from 7 as of December 31, 1998 to 23 as of December 31, 1999.
Additionally, our occupancy costs increased as our headcount growth required
that we expand our headquarter offices and add offices in other locations
outside the U.S.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
consist primarily of amortization of intangibles including goodwill relating to
our acquisitions and a non-compete agreement. Depreciation and amortization
expenses for the year ended December 31, 1999 increased by approximately $0.5
million over the year ended December 31, 1998 due to the acquisition of FPN in
August 1999 and additions in property and equipment.
STOCK-BASED COMPENSATION. Stock-based compensation expenses consist of
the amortization of deferred stock compensation resulting from the grant of
stock options at exercise prices deemed to be less than the fair value of the
common stock on the grant date. At December 31, 1999, deferred stock
compensation, which is a component of stockholders' equity, was $4.9 million.
This amount is being amortized ratably over the vesting periods of the
applicable stock options, typically four years, with either 25% cliff vesting
or 28% vesting on the first anniversary of the grant date and the balance
vesting 2% monthly thereafter. We expect to incur stock-based compensation
expense of at least $1.6 million in 2000, 2001 and 2002.
NET OPERATING LOSSES AND TAX CREDIT CARRYFORWARDS.
As of December 31, 1999, we had approximately $8.6 million of state
and federal net operating loss carryforwards for tax reporting purposes
available to offset future taxable income. Such net operating loss
carryforwards begin to expire in 2009, to the extent that they are not
utilized. We have not recognized any benefit from the future use of loss
carryforwards since inception. Management's evaluation of all the available
evidence in assessing realizability of the tax benefits of such loss
carryforwards indicates that the underlying assumptions of future profitable
operations contain risks that do not provide sufficient assurance to recognize
the tax benefits currently. In addition, the net operating loss carryforwards
could be limited in future years if there is a significant change in our
ownership.
LIQUIDITY AND CAPITAL RESOURCES
From inception, we have financed our operations through private sales
of our common stock and redeemable convertible preferred stock. During the year
ended December 31, 1999, we raised approximately $28 million through sales of
our redeemable convertible preferred stock, including $8 million and $20 million
raised in the first and fourth quarters of 1999, respectively.
Net cash used in operating activities was approximately $0.5 million
for the year ended December 31, 1998 and $7.8 million for the year ended
December 31, 1999. This use of cash was primarily attributable to our net
losses in each of those periods. In 1999, the net loss was offset by a non-
34
<PAGE> 37
cash stock-based compensation charge and a significant increase in our accounts
payable and accrued compensation.
Net cash used in investing activities was approximately $0.02 million
for the year ended December 31, 1998 and $5.7 million for the year ended
December 31, 1999 an increase primarily attributable to the acquisition of
technology equipment and the development of software which represented $2.9
million of cash payments as of December 31, 1999.
Net cash provided by financing activities was approximately $0.6
million for the year ended December 31, 1998 and $24 million for the year ended
December 31, 1999. In addition to the sales of our Series A and Series B
redeemable convertible preferred stock, which provided proceeds of approximately
$21.4 million, we obtained an advance of $2.4 million from an investor during
the year ended December 31, 1999. The advance was subsequently discharged in
exchange for shares of our Series B redeemable convertible preferred stock.
As of December 31, 1999, we had approximately $10.6 million in cash and
cash equivalents. In addition, we had a $3.8 million receivable from investors
in the Series B private placement. As of February 4, 2000, approximately $3.3
million had been received.
We expect to continue to incur losses and to utilize cash in our
operations for the next several years. We believe that our current cash and cash
equivalents will be sufficient to meet our anticipated requirements for at least
the next 12 months. We expect that we will need to raise additional funds,
including through equity offerings, in the future in order to successfully
implement our strategy.
In addition, if cash generated from operations is insufficient to
satisfy our liquidity requirements, we may seek to sell additional equity or
debt securities. If additional funds are raised through the issuance of debt
securities, these securities could have rights, preferences and privileges
senior to those accruing to holders of our common stock, and the terms of this
debt could impose restrictions on our operations. The sale of additional equity
or debt securities could result in additional dilution to our stockholders, and
we cannot be certain that additional financing will be available in amounts or
on terms acceptable to us, if at all. If we are unable to obtain this additional
financing, we may be required to reduce the scope of our planned technology or
product development and sales and marketing efforts, which could harm our
business.
YEAR 2000 READINESS
The Year 2000 issue refers to the potential for system and processing
failures of date-related calculation, and is the result of computer-controlled
systems using two digits rather than four to define the applicable year. For
example, computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in system failure or
35
<PAGE> 38
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, operate our sites, send
invoices, or engage in similar normal business activities.
To date, we have not experienced any material Year 2000 issues and
have not been informed by our material suppliers and vendors that they have
experienced material Year 2000 issues. We have not spent a material amount on
Year 2000 compliance issues. Most of our expenses have related to the operating
costs associated with time spent by employees and consultants in the evaluation
process and Year 2000 compliance matters generally.
If we fail to identify a remedy to any non-compliant internal or
external Year 2000 problems, or Year 2000 problems create a systemic failure
beyond our control, including a prolonged telecommunications or electrical
failure or a prolonged failure of third party software on which we rely, we
could be prevented from operating our business and permitting users access to
our sites. Such an occurrence would have a negative impact on our business.
MARKET RISK
To date, our results of operations have not been impacted materially
by inflation in the United States, Holland or in the countries that comprise
Latin America.
Although approximately 50% of our revenues generated in 1999 are
denominated in U.S. dollars, an increasing percentage of our revenues will
likely be denominated in foreign currencies. As a result, our revenues may be
impacted by fluctuations in these currencies and the value of these currencies
relative to the U.S. dollar. In addition, a portion of our monetary assets and
liabilities and our accounts payable and operating expenses are denominated in
foreign currencies. Therefore, we are exposed to foreign currency exchange
risks. We have not tried to reduce our exposure to exchange rate fluctuations
by using hedging transactions. However, we may choose to do so in the future.
We may not be able to do this successfully. Accordingly, we may experience
economic loss and a negative impact on earnings and equity as a result of
foreign currency exchange rate fluctuations.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Historically, we have not entered into derivative contracts to hedge existing
risks or for speculative purposes. Accordingly, we do not expect the adoption
of the new standard on January 1, 2001 to affect our financial statements.
36
<PAGE> 39
ITEM 3. PROPERTIES
Our corporate headquarters are located at 9677 Tradeport Drive in an
office facility in Orlando, Florida, where we lease approximately 24,675 square
feet under the terms of a lease which expires in April 2003 for a monthly fee
of $25,000. For our European operations, we maintain two offices in Amsterdam,
Netherlands where we lease approximately 5,400 square feet under leases which
expire in 2002 for a monthly fee of $5,200. We also lease a small corporate
office in Jerusalem, Israel under a lease that expires in December 2000 for a
monthly fee of $750. We utilize sales offices in Quito, Ecuador and Bogota,
Colombia for which we are not obligated to pay rent but for which we incur
costs related to consulting arrangements with third parties. We believe that
our existing facilities are adequate to support our existing operations and
that, if needed, we will be able to obtain suitable additional facilities on
commercially reasonable terms.
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<PAGE> 40
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information regarding the beneficial
ownership of World Commerce's common stock as of December 31, 1999, by the
following individuals or groups:
o each person or entity who we know beneficially owns more than 5.0%
in the aggregate of our outstanding common stock;
o each of the executive officers named in the Summary Compensation
Table;
o each of our directors; and
o all directors and executive officers as a group.
Unless otherwise indicated, the address of each of the individuals
listed in the table is c/o World Commerce, 9677 Tradeport Drive, Orlando,
Florida 32827. To our knowledge, except as otherwise indicated, and subject to
community property laws where applicable, the persons named in the table have
sole voting and investment power with respect to all shares of common stock
held by them.
The percentage of beneficial ownership in the following table is based
upon 15,435,357 shares of common stock outstanding as of December 31, 1999.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of our common stock issuable under
options, warrants or other conversion rights that are presently exercisable or
exercisable within 60 days of December 31, 1999 are deemed to be outstanding
and beneficially owned by the person holding the options, warrants or
conversion rights for the purpose of computing the percentage of ownership of
that person, but are not treated as outstanding for the purpose of computing
the percentage of any other person.
<TABLE>
<CAPTION>
NUMBER OF SHARES SHARES BENEFICIALLY OWNED AS A
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENTAGE OF CLASS OUTSTANDING
------------------------ ------------------ -------------------------------
<S> <C> <C>
Robert H. Shaw............................ 1,299,776(1) 8.3%
Mark E. Patten............................ 25,000 *
J. Keith Money............................ 377,500(2) 2.4%
Henry R. Winogrond........................ 80,000(3) *
John R. Daniel II......................... 81,070(4) *
Jacobus N. Kras........................... 80,000(5) *
Michael W. Poole.......................... 225,000(6) 1.4%
David R. Parker........................... 5,635,000(7) 26.7%
Interprise Technology Partners, L.P....... 5,610,000(8) 26.7%
William A. Mobley, Jr..................... 1,767,500(9) 11.5%
Larry L. Murphy........................... 2,510,750(10) 16.3%
Kenneth B. Cobb II........................ 615,000(11) 4.0%
All directors and executive officers as a
group (9 persons)...................... 7,868,346 36.0%
</TABLE>
- --------------------
* Less than one percent.
(1) Includes 139,776 shares of common stock subject to options either
currently exercisable or exercisable by Mr. Shaw within 60 days of
December 31, 1999. Includes 1,160,000 shares of common stock held jointly
between Mr. Shaw and his spouse, and each person, acting individually, may
vote and/or dispose of all of such shares.
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<PAGE> 41
(2) Includes 96,000 shares of common stock subject to options either currently
exercisable or exercisable by Mr. Money within 60 days of December 31,
1999.
(3) All 80,000 shares of common stock are subject to options either currently
exercisable or exercisable by Mr. Winogrond within 60 days of December 31,
1999.
(4) Includes 80,000 shares of common stock subject to options either currently
exercisable or exercisable by Mr. Daniel within 60 days of December 31,
1999. Also includes 70 shares of common stock in the name of Mr. Daniel's
grandson as to which Mr. Daniel has sole voting and dispositive power over
such shares.
(5) All 80,000 shares of common stock are subject to options either currently
exercisable or exercisable by Mr. Kras within 60 days of December 31,
1999.
(6) Includes 25,000 shares of Series B preferred stock which are immediately
convertible into 25,000 shares of common stock. Includes a warrant
representing the right to purchase 100,000 shares of common stock held by
a trust of which Mr. Poole is the sole trustee and exercises sole voting
and dispositive power over such shares. Includes a warrant representing
the right to purchase 100,000 shares of common stock held by Poole Carbone
Capital Partners, Inc. for which Mr. Poole is the controlling principal
and exercises sole voting and dispositive power over such shares.
(7) Mr. Parker, individually, owns 25,000 shares of Series B preferred stock
which are immediately convertible into 25,000 shares of common stock.
Interprise Technology Partners, L.P., a Delaware limited partnership, owns
4,000,000 shares of Series A preferred stock which are immediately
convertible into 4,000,000 shares of common stock; 1,250,000 shares of
Series B preferred stock which are immediately convertible into 1,250,000
shares of common stock; an option, which is immediately exercisable, to
purchase 250,000 shares of Series A preferred stock which are immediately
convertible into 250,000 shares of common stock; and a warrant, which is
immediately exercisable, representing the right to purchase 110,000 shares
of Series B preferred stock which are immediately convertible into 110,000
shares of common stock. Miller Technology Management, L.P., a Delaware
limited partnership, is the general partner of Interprise Technology
Partners, L.P. MTM I, LLC, a Delaware limited liability company, is the
general partner of Miller Technology Management, L.P. Mr. David Parker and
Mr. Edmund Miller each own a 50% interest in MTM I, LLC, and Mr. Parker
and Mr. Miller must both agree on the voting and disposition of shares
held by Interprise Technology Partners, L.P. The address for each of
Interprise Technology Partners, L.P., Miller Technology Management, L.P.,
MTM I, LLC, Mr. Parker and Mr. Miller is 1001 Brickell Bay Drive, 30th
Floor, Miami, Florida 33131.
(8) See Footnote No. 7.
(9) Shares are held jointly between Mr. Mobley and his spouse, and each
person, acting individually, may vote and/or dispose of all of such
shares. The address of Mr. and Mrs. Mobley is 57 West Pine Street,
Orlando, Florida 32801.
(10) The address of Mr. Murphy is 210 Riverside Drive, Melbourne Beach, Florida
32951.
(11) Includes 315,000 shares held jointly between Mr. Cobb and his spouse, and
each person, acting individually, may vote and/or dispose of all of such
shares. Includes 250,000 shares held jointly between Mr. Cobb and Charles
T. Black, Jr., and each person, acting individually, may vote and/or
dispose of all of such shares. Includes a warrant representing the right
to purchase 50,000 shares of common stock and such warrant is exercisable
immediately. The address of Mr. Cobb and Mr. Black is 740 Florida Central
Parkway, Suite 2000, Longwood , Florida 32750.
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<PAGE> 42
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Our directors, executive officers and significant employees, and their
ages as of December 31, 1999, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert H. Shaw 56 Chairman of the Board and Chief Executive Officer
Mark E. Patten 36 Chief Financial Officer and Executive Vice President
J. Keith Money 45 Chief Marketing Officer and Executive Vice President
Henry R. Winogrond 57 Executive Vice President of Business Development
John R. Daniel II 55 Executive Vice President of Operations
Eugenio M. Valdes 42 Chief Operating Officer Floraplex Americas
Jacobus N. Kras 50 Executive Vice President for Europe
David R. Parker(1)(2) 56 Director
Michael W. Poole(1)(2) 43 Director
</TABLE>
- -------------
(1) Member of the compensation committee.
(2) Member of the audit committee
Set forth below is certain information regarding the professional
experience for each of the above-named persons.
ROBERT H. SHAW has served as our Chairman and Chief Executive Officer
since October 1998. From October 1997 to October 1998 Mr. Shaw was Chief
Executive Officer of Roundabout Logic, Inc., a leader in immersive imaging
technology. From 1995 to October 1997 Mr. Shaw was Chairman and Chief Executive
Officer of Galacticom, Inc., a worldwide leader of multi-user communications
software and e-commerce systems with an international customer base of more
than 20,000 users. Mr. Shaw received a bachelors degree in electrical
engineering from Northeastern University.
MARK E. PATTEN has served as our Chief Financial Officer and Executive
Vice President since October 1999. From February 1998 to October 1999, Mr.
Patten was Vice President and Chief Accounting Officer of Vistana, Inc., a
publicly traded timeshare resort developer. Prior to that, Mr. Patten was a
partner in the Information Risk Management practice of KPMG Peat Marwick LLP
from July 1997 to January 1998 and a Senior Manager with KPMG for a period of
four years prior to his election into the partnership including a two year
rotation in KPMG's Executive Office in the Department of Professional Practice.
Mr. Patten has a bachelors degree in accounting from the University of Florida
and is a Certified Public Accountant in Georgia.
J. KEITH MONEY has served as our Chief Marketing Officer and Executive
President since October 1998. From October 1997 to September 1998 Mr. Money was
Vice President of Sales and Marketing and Chief Operating Officer of Roundabout
Logic, Inc. From 1995 to September 1997 Mr. Money was Director of Sales for
Galacticom, Inc. Mr. Money received a bachelors degree in liberal arts and
history from Wingate University.
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<PAGE> 43
HENRY R. WINOGROND has served as our Executive Vice President of
Business Development since January 1999. From January 1996 to December 1998 Mr.
Winogrond was President of Great Lakes Floral Services, Inc., a provider of
investment consulting services in the floriculture industry. From January 1995
to December 1995 Mr. Winogrond was President of Bouquet Connection de los
Andes, a fresh cut flower importer. For the preceding seven years Mr. Winogrond
was President of Southern Rainbow, a fresh cut flower grower and importer. Mr.
Winogrond was also with Dole Food Company for seventeen years. Mr. Winogrond
has a bachelors degree in business administration from the University of
Wisconsin and an MBA from Stanford University.
JOHN R. DANIEL II has served as our Executive Vice President of
Operations since April 1999. Prior to joining WCO Mr. Daniel served in several
positions at U.S. Petroleum Construction, a petroleum equipment installation
company, including his last position as Vice President and General Manager,
from October 1997 to April 1999. From October 1993 to July 1997 Mr. Daniel
served in several positions with Omega, a petroleum equipment installation
company, including his last position as President of the Southeast region. The
previous 25 years of Mr. Daniel's career were spent in various management
positions in the computer technology industry.
EUGENIO M. VALDES has served as our Chief Operating Officer of the
Floraplex Americas division since July 1999. From May 1998 to June 1999 Mr.
Valdes was President of Dole Fresh Flowers, a division of Dole Food Company.
From June 1996 to May 1998 Mr. Valdes was President of Sunburst Farms, the
largest grower and leading distributor of fresh-cut flowers worldwide, prior to
its acquisition by Dole. For the preceding 10 years Mr. Valdes served in
varying sales, marketing and financial executive management positions with
Sunburst. Mr. Valdes received his bachelors degree in business from the
University of Miami and MBA from Nova Southeastern University.
JACOBUS N. KRAS has served as Executive Vice President for Europe
since July 1999. Since 1991, Mr. Kras has served as President of Hortimarc
B.V., a consultancy company to the horticulture industry based in Amsterdam,
The Netherlands. From 1980 to 1991 Kras was with the Dutch Association of
Flower Auctions serving as Chief Executive Officer from 1985 to 1991. Mr. Kras
is Chairman of the Board of Jac van Dillewijn B.V., a hardgood supplier in
Aalsmeer, Holland, and a director of Hazera Holding International, an Israeli
breeder of vegetable seeds. Mr. Kras is also member of the board of directors
of the Dutch Association of Agriculture Law. Mr. Kras has a bachelors degree
and masters degree in law from the University of Amsterdam and an MBA from the
University of Nijenrode.
DAVID R. PARKER has served as a Director since February 1999. Mr.
Parker is founder and Managing Principal of Interprise Technology Partners,
L.P., a venture capital fund focused on Internet and information technology
investments founded in January 1999. From 1992 to May 1998 Mr. Parker was
Chairman of ProSource Distribution Services, Inc., a leading U.S. food services
distributor which was sold for cash to AmeriServe Inc. in May 1998. From May
1998 to August 1998, Mr. Parker was Vice Chairman of AmeriServe, Inc. overseeing
the integration of ProSource into AmeriServe, until he resigned from the Company
in August 1998, but remained on the board of directors until he resigned from
the board in November 1999. Mr. Parker is a director of Tupperware, Inc. and
Applied Graphics Technologies Inc. Mr. Parker earned a bachelors degree in
engineering from the University of Texas and an MBA from Harvard University,
where he was a Baker Scholar.
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<PAGE> 44
MICHAEL W. POOLE has served as a Director since February 1999. Mr.
Poole is a member of the Board of Directors of the Federal Reserve Bank of
Atlanta (Jacksonville, Florida branch). Since 1997, Mr. Poole has been a
principal with Poole Carbone Eckbert, Inc., an investment banking firm
providing traditional corporate finance services to middle market companies.
Since 1986 Mr. Poole has been President of Blaker Investment Company, a private
investment firm owned by Mr. Poole. Mr. Poole received his bachelors degree in
finance from the University of Florida and his MBA from Rollins College.
BOARD OF DIRECTORS AND COMMITTEES
Our bylaws provide for a board of directors consisting of at least 1
but no more than 9 individuals who are elected at the annual meeting and serve
for 1 year and until their successor is elected and qualified.
The board of directors has a compensation committee and an audit
committee.
COMPENSATION COMMITTEE. The compensation committee of the board of
directors reviews and makes recommendations to the board regarding all forms of
compensation provided to the executive officers and directors of World Commerce
and its subsidiaries including stock compensation and loans. In addition, the
compensation committee reviews and makes recommendations on stock compensation
arrangements for all of our employees. The compensation committee also
administers our 1999 Stock Option Plan. The current members of the compensation
committee are David Parker and Michael Poole, with Mr. Parker chairing the
committee.
AUDIT COMMITTEE. The audit committee of the board of directors is
responsible for reviewing and monitoring the corporate financial reporting and
the internal and external audits of World Commerce, including, among other
things, our internal audit and control functions, the results and scope of the
annual audit and other services provided by our independent auditors and our
compliance with legal requirements that have a significant impact on our
financial reports. The audit committee also is responsible for consulting with
our management and our independent auditors regarding the preparation of
financial statements and, as appropriate, initiating inquiries into aspects of
our financial affairs. In addition, the audit committee has the responsibility
to consider and recommend the appointment of, and to review fee arrangements
with, our independent auditors. The current members of the audit committee are
Mr. Parker and Mr. Poole, with Mr. Poole chairing the committee.
DIRECTOR COMPENSATION
We reimburse directors for reasonable out-of-pocket expenses incurred
in attending meetings of the board of directors. We may, at our discretion,
grant stock options and other equity awards to our non-employee directors from
time-to-time pursuant to our 1999 Stock Option Plan or otherwise. In January
1999, we issued a warrant to the Michael W. Poole Trust representing the right
to purchase 100,000 shares of our common stock of which Mr. Poole is the
trustee, at an exercise price of $2.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of the board of directors consisted in
1999, and currently consists of, David Parker and Michael Poole. There were no
compensation committee interlocks during our last fiscal year.
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<PAGE> 45
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the fiscal
year ended December 31, 1999 paid by us for services by our Chief Executive
Officer and our other executive officers whose total salary and bonus for that
fiscal year exceeded $100,000, collectively referred to below as the "named
executive officers." None of the executive officers received total compensation
of at least $100,000 prior to fiscal year 1999.
SUMMARY COMPENSATION IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION AWARDS
------------ ------------------------------------------
RESTRICTED STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(3) ($) AWARD(s)($) UNDERLYING OPTIONS (#) COMPENSATION ($)
- ----------------------------------- ------------- ---------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Robert H. Shaw,(1) 129,300 -- 436,800 25,400(6)(7)
Chief Executive Officer
Mark E. Patten, 39,600 100,000(4) 200,000 1,000(8)
Chief Financial Officer
J. Keith Money, 108,400 -- 300,000 25,000(6)(7)
Chief Marketing Officer
Henry R. Winogrond, 132,794 -- 250,000 16,400(6)(7)
Executive VP of Bus. Development
John R. Daniel II, 109,700 -- 250,000 4,200(7)
Executive VP of Operations
Jacobus N. Kras, 90,000 -- 250,000 --
Executive VP for Europe
Kenneth B. Cobb II,(2) 118,500 -- 100,000(5) 4,200(7)
former Chief Financial Officer
</TABLE>
- ---------------------
(1) For the fiscal year ended December 31, 1998, Mr. Shaw received compensation
in the form of consulting fees paid to a company controlled by Mr. Shaw in
the amount of $30,045. Also, Mr. Shaw was issued 1,200,000 shares of our
common stock in September 1998 for services rendered in facilitating the
voluntary share exchange between us and World Commerce Online-Floraplex.
(2) Mr. Cobb held the position of Chief Financial Officer until his resignation
in September 1999.
(3) Does not represent a full year of salary because no person listed was paid
a salary at the beginning of the fiscal year. See footnote 6.
(4) Represents 25,000 shares valued at $5.38 per share issued in October 1999
in connection with the start of employment.
(5) Reflects issuance of two warrants in September 1999 representing the right
to purchase 50,000 shares of our common stock at an exercise price of $8
and $2 per share, respectively.
(6) Other compensation includes payments to Mr. Shaw, Mr. Money and Mr.
Winogrond as consultants prior to full-time employment in the amount of
$21,200, $20,800, and $12,200, respectively.
(7) Includes an automobile allowance in an amount of $4,200.
(8) Automobile allowance in an amount of $1,000.
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<PAGE> 46
OPTION GRANTS TABLE
The following table sets forth each grant of stock options during the
fiscal year ended December 31, 1999 to each of the named executive officers. No
stock appreciation rights were granted to these individuals during that year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED TO EXERCISE OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES IN OR BASE FOR OPTION TERM(4)
OPTIONS FISCAL PRICE EXPIRATION MARKET PRICE --------------------------------
NAME GRANTED(1) YEAR ($)/(Sh) DATE(2) ($)(Sh)(3) 5%($) 10%($) 0%($)
- ------------------- ---------- ------------ -------- ---------- ------------ --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert H. Shaw 236,800 8.4% 2.00 10/18/09 5.38 1,596,175 2,821,223 797,680
200,000 7.1% 8.00 10/18/09 5.38 152,691 1,190,867 --
Mark E. Patten 126,876 4.5% 2.00 10/18/09 5.38 858,959 1,518,200 429,260
73,124 2.6% 5.38 10/18/09 5.38 246,992 625,926 --
J. Keith Money 300,000 10.6% 2.00 10/18/09 5.38 2,029,036 3,586,300 1,014,000
Henry R. Winogrond 250,000 8.9% 2.00 10/18/09 5.38 1,690,863 2,988,584 845,000
John R. Daniel II 200,000 7.1% 2.00 10/18/09 5.38 1,352,691 2,390,867 676,000
50,000 1.8% 8.00 10/18/09 5.38 38,173 297,717 --
Jacobus N. Kras 250,000 8.9% 2.00 10/18/09 5.38 1,690,863 2,988,584 845,000
Kenneth B. Cobb II -- -- -- -- -- -- -- --
</TABLE>
- --------------------
(1) All options were granted as of October 18, 1999. All options granted to
everyone other than Mr. Patten vest 28% on January 1, 2000, and 2% on the
first of each successive month thereafter. The options granted to Mr.
Patten vest 28% on October 18, 2000 and 2% on the eighteenth of each
successive month thereafter.
(2) Each of the options has a ten-year term. However, the options will
terminate earlier if the optionee's employment is terminated or the Company
is liquidated, dissolved, reorganized or there is a change in control.
(3) The fair market value of our common stock was determined on the basis of
the closing sale price of our common stock on October 15, 1999, pursuant to
the terms of our 1999 Stock Option Plan.
(4) The assumed 5%, 10% and 0% rates of stock price appreciation are provided
in accordance with rules of the SEC and do not represent our estimate or
projection of our common stock price. Actual gains, if any, on stock option
exercises are dependent on the future performance of our common stock,
overall market conditions, and the optionholder's continued employment
through the vesting period. Unless the market price of our common stock
appreciates over the option term, no value will be realized from the option
grants made to these executive officers. The potential realizable value is
based on the assumption that the common stock price appreciates at the
annual rate shown, compounded annually, from the date of grant until the
end of the option period. The actual value, if any, a named executive
officer may realize will depend upon the excess of the stock price over the
exercise price on the date the option is exercised, if the executive were
to sell the shares on the date of exercise, so there is no assurance that
the value realized will be equal to or near the potential realized value as
calculated in this table.
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<PAGE> 47
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning the year-end
number and value of unexercised options for each of the named executive
officers. None of the individuals listed below exercised any options during the
last fiscal year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1999(#) DECEMBER 31, 1999($)(1)
------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Robert H. Shaw - 436,800 - 5,517,984
Mark E. Patten - 200,000 - 2,828,865
J. Keith Money - 300,000 - 4,614,000
Henry R. Winogrond - 250,000 - 3,845,000
John R. Daniel II - 250,000 - 3,545,000
Jacobus N. Kras - 250,000 - 3,845,000
Kenneth B. Cobb II - - - -
</TABLE>
- ---------------
(1) The fair market value of our common stock on December 31, 1999 was $17.38.
These values have been calculated based on a price of $17.38 per share,
minus the applicable per share exercise price.
EMPLOYMENT AGREEMENTS
The following named executive officers have signed employment
agreements with us:
Pursuant to an employment agreement dated October 18, 1999, we agreed
to pay Robert H. Shaw an annual salary of $225,000 to serve as our Chief
Executive Officer. In accordance with the offer terms, Mr. Shaw, on October 18,
1999, was granted 236,800 options to purchase our common stock at an exercise
price per share of $2 and 200,000 options to purchase our common stock at an
exercise price per share of $8. See "Option Grants Table."
Pursuant to an employment agreement with substantially similar
provisions as Mr. Shaw dated October 18, 1999, we agreed to pay Mark E. Patten
an annual salary of $180,000 to serve as Executive Vice President and Chief
Financial Officer and as of October 18, 1999 granted Mr. Patten 126,876 options
to purchase our common stock at an exercise price per share of $2.00 and 73,124
options to purchase our common stock at an exercise price per share of $5.38.
In addition, on October 18, 1999, Mr. Patten was granted and issued 25,000
shares of our common stock and provided $25,000, as well as, a loan of up to
$25,000 in connection with the related tax impact. See "Option Grants Table."
Pursuant to an employment agreement with substantially similar
provisions as Mr. Shaw dated October 18, 1999, we agreed to pay J. Keith Money
an annual salary of $180,000 to serve as our Chief Marketing Officer and as of
October 18, 1999, granted Mr. Money 300,000 options to purchase our common
stock at an exercise price per share of $2. See "Option Grants Table."
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<PAGE> 48
Pursuant to an employment agreement with substantially similar
provisions as Mr. Shaw dated October 18, 1999, we agreed to pay Henry R.
Winogrond an annual salary of $180,000 to serve as our Executive Vice President
of Business Development and as of October 18, 1999, granted Mr. Winogrond
250,000 options to purchase our common stock at an exercise price per share of
$2. See "Option Grants Table."
Pursuant to an employment agreement with substantially similar
provisions as Mr. Shaw dated October 18, 1999, we agreed to pay John R. Daniel
II an annual salary of $180,000 to serve as our Executive Vice President of
Operations and as of October 18, 1999, granted Mr. Daniel 200,000 options to
purchase our common stock at an exercise price per share of $2 and 50,000
options to purchase our common stock at an exercise price per share of $8. See
"Option Grants Table."
Pursuant to an employment agreement with substantially similar
provisions as Mr. Shaw dated October 18 1999, we agreed to pay Jacobus N. Kras
an annual salary of $180,000 to serve as our Executive Vice President for
Europe and as of October 18, 1999, granted Mr. Kras 250,000 options to purchase
our common stock at an exercise price per share of $2. See "Option Grants
Table."
Each of the employment agreements described above provide that in the
event we terminate the executive without "cause" (as defined), or the executive
terminates his employment with "good reason" (as defined), other than in the
case of a "change in control" (as discussed below), that executive will be
entitled to severance payments equaling that executive's annual salary and
benefits for a one-year period from the date of termination. In the event the
terminated executive finds a new employment, we will be able to cease making or
reduce the severance payments and benefits. If an executive's employment is
terminated by us without cause or by the executive with good reason, in either
case in anticipation of, in connection with or within one year after a "change
in control" (as defined), his salary will be continued for one year, his
benefits will be continued for one year (subject to cessation if the executive
is entitled to similar benefits from a new employer), each executive will agree
to preserve the confidentiality and the proprietary nature of all information
relating to the Company and our business. Each executive's agreement includes
certain non-competition and non-solicitation provisions.
EMPLOYEE BENEFIT PLANS
Our board of directors adopted our 1999 Stock Option Plan in July 1999
and our stockholders approved the adoption of the plan on October 18, 1999. The
compensation committee of the board of directors amended the plan in December
1999 by deleting a method of payment of the exercise price. We have reserved
3,000,000 shares of common stock for issuance under the plan, of which options
to purchase 2,813,800 shares were outstanding as of December 31, 1999.
The plan provides for grants of incentive stock options, and
nonqualified stock options, to our designated employees, advisors and
consultants, and to non-employee directors. No more than 500,000 shares in the
aggregate may be granted to any individual in any calendar year. If options
granted under the plan expire or are terminated for any reason without being
exercised, or are forfeited, the shares of common stock underlying such grant
will again be available for purposes of the plan.
The compensation committee of the board of directors administers and
interprets the plan. The compensation committee will consist of two or more
persons appointed by the board of directors from among its members, each of
whom must be a "non-employee director" as defined by Rule 16b-3 under the
Securities Exchange Act of 1934, and an "outside director" as defined by
Section 162(m) of the
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<PAGE> 49
Internal Revenue Code of 1986 and related Treasury regulations. The
compensation committee has complete discretion to make all decisions relating
to the interpretation and operation of the Plan, including the discretion to
determine which eligible individuals are to receive any award, and to determine
the type, number, vesting requirements and other features and conditions of
each award.
The exercise price for incentive stock options granted under the plan,
which may only be granted to employees, may not be less than 100% of the fair
market value of the common stock on the option grant date. The exercise price
may be paid in cash or by other means, including a cashless exercise method as
determined by the committee.
The compensation committee may amend or terminate the plan at any
time. If the compensation committee amends the plan, stockholder approval of
the amendment will be sought only if required by an applicable law. The plan
will continue in effect until the tenth anniversary of its effective date,
unless the compensation committee decides to terminate the plan earlier or
extend it with the approval of the stockholders.
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<PAGE> 50
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ISSUANCES OF STOCK
In March 1999, we sold to Interprise Technology Partners 4,000,000
shares of our Series A convertible preferred stock at a purchase price of $2 per
share. Pursuant to the terms of the Stock Purchase Agreement, ITP has the right
to elect one member to our board of directors. ITP elected David Parker as its
representative on our board of directors. In addition, in connection with the
Series A transaction, we granted an option to ITP to purchase an additional
250,000 shares of Series A convertible preferred stock exercisable at any time
over the next 5 years. In December 1999, we sold to ITP 1,250,000 shares of our
Series B convertible preferred stock at a purchase price of $4 per share. In
connection with the sale of the Series B convertible preferred stock and a $2.4
million bridge loan provided by ITP, we issued to ITP a warrant representing the
right to purchase up to 110,000 shares of our Series B convertible preferred
stock at an exercise price of $4 per share. See "Description of Registrant's
Securities." In addition, we sold 25,000 shares of our Series B convertible
preferred stock to each of David Parker and Michael W. Poole, individually, at a
purchase price of $4 per share. In December 1999, we also sold 25,000 shares of
our Series B convertible preferred stock to other affiliates of ITP at a
purchase price of $4 per share.
In October 1999, we issued 25,000 shares of our common stock to Mark
E. Patten in connection with the start of his employment with us as our Chief
Financial Officer and Executive Vice President.
CONSULTING ARRANGEMENTS
In 1996, we entered into a five year exclusive agreement with
Hortimarc B.V., a consulting business owned by Jacobus N. Kras, our Executive
Vice President for Europe as of October 1999, for the development of our
marketing and sales initiatives in the European market. The contract provided
for compensation to Hortimarc based upon time and materials billed. This
agreement was terminated upon the execution of an employment agreement with Mr.
Kras. However, we continue to utilize limited services of Hortimarc for which
we incur costs for time and materials. In 1999, we remitted $98,300 to
Hortimarc under the aforementioned agreement and activities conducted after the
termination of such agreement.
In January 1999, we entered into a two year agreement with Poole
Carbone Capital Partners, Inc., of which Mr. Poole as of December 31, 1999 was
the controlling principal, to receive financial and investment banking
services. In connection with this agreement we issued to Poole Carbone Capital
Partners two warrants each representing the right to purchase 50,000 shares of
our common stock at exercise prices of $12 and $10 per share, respectively.
In August 1999, in connection with the acquisition of FPN, we entered
into a four year consulting agreement with Jobo Holdings B.V., a consulting
business owned by Nils Van Beek, providing for the performance of advisory
services to us on matters pertaining to sales and product marketing for Europe,
Africa and the Middle East. The agreement provides annual compensation of
$150,000, and annual incentive compensation of $80,000 payable quarterly based
upon achievement of agreed-upon levels of transaction volume. In connection
with the acquisition of FPN, we also issued to Nils Van Beek a warrant
representing the right to purchase 100,000 shares of our common stock at an
exercise price of $11.50 per share.
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<PAGE> 51
The foregoing transaction between us and our affiliates were
negotiated upon our behalf by our management. We believe that such transactions
are in compliance with our policy that transactions with affiliates be on terms
at least as favorable as could have been reasonably obtained from an
unaffiliated third party. We anticipate that all future transactions with our
affiliates will be approved by a majority of our board of directors, including
a majority of the independent and disinterested directors, and will continue to
be on terms no less favorable to us then could be obtained from unaffiliated
third parties.
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<PAGE> 52
ITEM 8. LEGAL PROCEEDINGS
We are not aware of any pending legal proceedings against us that,
individually or in the aggregate, would have a material adverse effect on our
business, results of operation or financial condition. We may in the future be
party to litigation arising in the course of our business, including claims
that we allegedly infringe third party trademarks and other intellectual
property rights. These claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources.
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<PAGE> 53
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Our shares of common stock are traded over-the-counter on the OTC
Bulletin Board under the symbol "WCOL." The following table sets forth for the
periods indicated the high and low bid prices of our common stock, as reported
in published financial sources. The quotations reflect prices between dealers
in securities, without retail mark-up, mark-down or commission, and may not
represent actual transactions.
Upon the effectiveness of this registration statement, we intend to
apply to list our shares on the Nasdaq National Market, whereupon our shares
would cease to be quoted on the OTC Bulletin Board. There can be no assurance
that we will be able to obtain or maintain any such listing for our shares.
<TABLE>
<CAPTION>
Common Stock
-----------------------------
High Low
------- --------
<S> <C> <C>
Fiscal Year Ending December 31, 2000
First Quarter(1).................................................. 25 13 11/16
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
High Low
------- --------
<S> <C> <C>
Fiscal Year Ended December 31, 1999
Fourth Quarter.................................................... 16 1/2 5 1/6
Third Quarter..................................................... 16 5/8 5
Second Quarter.................................................... 14 1/8 4 7/8
First Quarter..................................................... 7 3/8 2 1/8
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
High Low
------- --------
<S> <C> <C>
Fiscal Year Ended December 31, 1998
Fourth Quarter.................................................... 3 3/4 2
Third Quarter (commencing September 9, 1998)(2)................... 2 1/2 2 1/2
</TABLE>
- -------------------
(1) As of February 7, 2000.
(2) Trading was commenced under the symbol SUEX.
As of December 31, 1999, there were 15,435,357 shares of common stock
outstanding, held by approximately 74 shareholders of record.
We have never declared or paid any cash dividends on our common stock
and do not anticipate declaring or paying cash dividends on our common stock in
2000 or in the foreseeable future. We currently intend to retain future
earnings to finance operations and fund the growth of our business. Any payment
of future dividends will be at the discretion of our board of directors and
will depend upon, among other things, our earnings, financial condition,
capital requirements, level of indebtedness, contractual restrictions in
respect of the payment of dividends and other factors that our board of
directors may deem relevant.
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<PAGE> 54
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below in chronological order is information regarding the
number of shares of common stock and preferred stock sold by us and the number
of options and warrants issued by us within the past three years, and the
consideration received by us for such shares, options and warrants. None of the
securities were registered under the Securities Act. In the opinion of World
Commerce, the sale or issuance of the above securities was deemed to be exempt
from registration under the Securities Act in reliance upon Section 4(2) of the
Securities Act, except as otherwise noted for the 1,705,000 shares sold or
issued in reliance upon Rule 504, as transactions by an issuer not involving any
public offering. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof, and
appropriate legends were fixed to the share certificates issued in such
transactions. All recipients had an opportunity to ask questions about us and
had adequate access to information about us. No sales of securities involved the
use of an underwriter and no commissions were paid in connection with the sale
or issuance of any securities.
On September 10, 1998, we issued 7,020,000 shares of our common stock
to World Commerce Online-Floraplex in exchange for all its outstanding shares
of common stock.
On September 23, 1998, we issued 3,380,000 shares of our common stock
to Consolidated Capital Group, Inc., PowWow, Inc., Roger Tichenor, Douglas
Hackett, Robert Shaw, Keith Money and Charles T. Black, Jr. and Kenneth B.
Cobb, II, as joint tenants, as consideration for services rendered in
facilitating the voluntary share exchange between us and World Commerce
Online-Floraplex.
Between September 25, 1998 and February 1, 1999, we sold 1,615,000
shares of our common stock to 27 persons at a purchase price of $.50 per share.
The sale of the securities was deemed to be exempt from registration under the
Securities Act in reliance upon Rule 504 of the Securities Act as a transaction
by an issuer not involving any public offering.
On October 21, 1998, we issued 300,000 shares of our common stock to
Kenneth B. Cobb, II as consideration for services rendered in his capacity as
acting chief financial officer.
On October 31, 1998, we issued 100,000 shares of our common stock to
Larry L. Murphy, on November 20, 1998, we issued 20,000 shares of common stock
to William A. Mobley, Jr., on December 17, 1999, we issued 30,000 shares of
common stock to William Armellini, and on January 18, 1999, we issued 35,000
shares of common stock to Tucker H. Byrd and 5,000 shares of common stock to
Jack L. Byrd, Jr., for satisfaction of all loans, notes and debts of any kind
made to World Commerce on each of Mr. Murphy's, Mr. Mobley's, Mr. Armellini's
and Mr. Tucker Byrd's behalf. The 5,000 shares issued to Jack L. Byrd, Jr. were
for satisfaction of loans made by Tucker H. Byrd. The issuance of the securities
was deemed to be exempt from registration under the Securities Act in reliance
upon Rule 504 of the Securities Act as a transaction by an issuer not involving
any public offering.
On December 7, 1998, we issued 200,000 shares of our common stock to
Noble House of Boston, Inc. as consideration for services rendered in performing
public relations work.
On January 15, 1999, we issued to each of Michael W. Poole Trust and
Poole Carbone Capital Partners, Inc., a warrant representing the right to
purchase 100,000 shares of our common stock as consideration for Mr. Poole
being a member of our board of directors and consulting services to be
performed by Poole Carbone Capital Partners, respectively.
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<PAGE> 55
On March 30, 1999, we sold 4,000,000 shares of our Series A
convertible preferred stock to Interprise Technology Partners for $8 million
and granted ITP an option to purchase an additional 250,000 shares of our Series
A convertible preferred stock.
On April 22, 1999, we issued 5,357 shares of our common stock to
Novelle Consulting, L.L.C. as consideration for services rendered and a warrant
representing the right to purchase 250,000 shares of our common stock in
consideration for consulting services performed by Novelle in connection with
FreshPlex.
In July 1999, we issued 80,000 shares of our common stock to Peter
Giarrusso in consideration of consulting services performed from January
1999 to July 1999 relating to the design and development of our B2B e-commerce
technology.
On August 26, 1999, in connection with our acquisition of FPN, we
issued 100,000 shares of our common stock to the sole stockholder of FPN, JoBo
Holding B.V., and we issued to Nils Van Beek, owner of JoBo, a warrant
representing the right to purchase 100,000 shares of our common stock.
On September 20, 1999, we issued to Kenneth B. Cobb II warrants
representing the right to purchase 100,000 shares of our common stock as
consideration for past services as our Chief Financial Officer.
On October 1, 1999, we issued 20,000 shares of our common stock and a
warrant representing the right to purchase 250,000 shares of our common stock
to Charles Kremp, III in connection with the consulting agreement with Mr.
Kremp and the discontinuance of the Kremp Network.
On October 18, 1999, we issued 25,000 shares of our common stock to
Mark E. Patten, our Chief Financial Officer, in connection with the
commencement of his employment at World Commerce.
On October 18, 1999, we issued to each of Tucker H. Byrd, Jr. and
Elizabeth Walsh a warrant representing the right to purchase 30,000 shares and
1,000 shares of our common stock, respectively, in connection with legal
services provided to us.
During the period from October 18, 1999 through December 16, 1999, we
granted to our employees stock options exercisable for an aggregate of
2,813,800 shares of our common stock at prices ranging from $2 to $11.75 per
share.
On December 10, 1999, we issued to Dole Fresh Flowers, Inc. a warrant
representing the right to purchase 1,000,000 shares of our common stock in
connection with Dole Fresh Flowers agreeing to sell its flowers through
Floraplex.
On December 16, 1999, we sold 5,000,000 shares of our Series B
convertible preferred stock to approximately 60 accredited investors for $20
million, including 1,250,000 shares for $5 million to Interprise Technology
Partners.
On December 16, 1999, we issued to Interprise Technology Partners a
warrant representing the right to purchase 110,000 shares of our Series B
convertible preferred stock in connection with a $2.4 million bridge loan
provided by Interprise Technology Partners.
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<PAGE> 56
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES
GENERAL
Our authorized capital stock consists of 90,000,000 shares of common
stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par
value $.001 per share.
COMMON STOCK
As of December 31, 1999, there were 15,435,537 shares of common stock
outstanding, all of which are fully paid and nonassessable. The holders of
common stock are entitled to one vote per share on all matters to be voted upon
by the stockholders. Subject to any preferential rights of preferred stock
holders, the holders of common stock are entitled to receive dividends on a pro
rata basis, if any, declared from time to time by the board of directors out of
legally available funds. In the event of our liquidation, dissolution or
winding up, subject to any preferential rights of preferred stock holders, the
holders of common stock are entitled to share on a pro rata basis in all assets
remaining after payment of liabilities. The common stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the common stock. We have never paid
dividends in the past and do not intend to do so in the future.
PREFERRED STOCK
The following is a description of certain terms of our Series A and
Series B convertible preferred stock, or collectively referred to as our
preferred stock, which is intended as a summary only, and is qualified in its
entirety by reference to the complete text of each Certificate of Designations
which contain the voting powers, designations, preferences and rights of the
Series A and Series B convertible preferred stock. A copy of each certificate is
filed as an exhibit to this registration statement. As of December 31, 1999,
there were 9,000,000 shares of preferred stock issued and outstanding, all of
which are fully paid and non-assessable. Except as otherwise noted, the Series A
and Series B redeemable convertible preferred stock had the same powers,
designations, preferences and rights.
RANKING. The preferred stock will, with respect to dividend rights and
rights upon liquidation, dissolution and winding up, rank senior to our common
stock.
DIVIDENDS. The holders of outstanding shares of preferred stock are
not as a matter of right entitled to be paid or receive any dividends or
distributions. The board of directors may decide, at its discretion, whether or
not to pay dividends and in what amount. The board of directors shall not pay
or declare any dividend or make any distribution to the holders of shares of
common stock as long as their remains any shares of preferred stock
outstanding.
LIQUIDATION. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of World Commerce, the holders of the
outstanding shares of Series A and Series B preferred stock are entitled to
receive $2.00 and $4.00, respectively, in cash for each respective outstanding
share of preferred stock (plus all accrued and unpaid dividends), before any
distribution or payment to the holders of outstanding shares of any other
capital stock of World Commerce. In addition to and after payment in full of
all other amounts payable to the holders of the outstanding shares of preferred
stock upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of World Commerce, the holders of the outstanding shares of the
preferred stock shall be entitled to
54
<PAGE> 57
participate on an as-if-converted basis with the holders of the outstanding
shares of our common stock as a single class in the distribution of our assets
with respect to the common stock.
REDEMPTION. No outstanding shares of preferred stock shall be callable
or redeemable by us. The holders of a majority of the outstanding shares of
preferred stock may require World Commerce to redeem all of the preferred stock
owned by such holders at a price equal to $2.00 per share for the Series A
(plus all accrued and unpaid dividends thereon) and $4.00 per share for the
Series B (plus all accrued and unpaid dividends thereon) at any time after
April 1, 2001, upon the occurrence of a change in ownership of a majority of
our outstanding shares of common stock, and/or upon the sale or transfer of
more than 50% of our assets.
VOTING RIGHTS. The holders of the outstanding shares of Series A and
Series B preferred stock, voting separately as a single class to the exclusion
of all other classes of our capital stock, are each entitled to elect one
member to our board of directors until such time as no shares of their
respective preferred stock are outstanding. The holders of a majority of the
outstanding shares of both the Series A and Series B preferred stock must
approve any increase in the number of directors on our board of directors
beyond five. The holders of the outstanding shares of preferred stock shall be
entitled to notice of all stockholders' meetings in accordance with our Bylaws,
and except in the election of directors, shall be entitled to vote on all
matters submitted to the stockholders for a vote together with the holders of
the outstanding shares of common stock voting together as a single class with
each share of preferred stock entitled to one vote for each share of common
stock issuable upon conversion of the preferred stock.
CONVERSION RIGHTS. At any time any holder of preferred stock may
convert all or any portion of the preferred stock held by such holder into a
number of shares of common stock computed by: (i) for Series A preferred stock,
multiplying the number of shares of Series A preferred stock to be converted by
$2.00 and dividing the result by the conversion price of $2.00; or (ii) for
Series B preferred stock, multiplying the number of shares of Series B
preferred stock to be converted by $4.00 and dividing the result by the
conversion price of $4.00. The conversion price of both the Series A and Series
B preferred stock is subject to adjustment pursuant to customary anti-dilution
provisions. The conversion of the preferred stock at the election of the holder
thereof shall take effect as of the close of business on the date on which the
certificate or certificates representing the preferred stock to be converted
have been surrendered for conversion at our principal office. Furthermore, we
may at any time require the mandatory conversion of all outstanding shares of
preferred stock at such time as we close a public offering of our common stock
in which we raise at least $15,000,000, the price per share paid for our common
stock was at least three hundred percent above the conversion price of the
preferred stock then in effect, and the holders of the preferred stock were
permitted to include their shares in the public offering, subject to
underwriting limitations. The mandatory conversion would be effective upon the
closing of the public offering provided written notice of such mandatory
conversion was given to all holders of the preferred stock at least seven days
prior to such closing.
REGISTRATION RIGHTS. The holders of the outstanding shares of
preferred stock have registration rights relative to the common stock issuable
upon conversion of their preferred stock. All registration rights become
available on the earlier of April 1, 2001 or one hundred eighty days after the
close of our first registered public offering of our common stock under the
Securities Act with net proceeds of not less than $15,000,000, and end three
years thereafter. The registration rights are provided under the terms of an
agreement between us and the holders of the preferred stock. Subject to
limitations in the agreement, the holders of a majority of preferred stock can
demand up to five times that we register their shares of common stock, and if
we register any of our common stock either for our own account or for the
account of other security holders, each holder of shares of preferred stock is
entitled to "piggyback"
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<PAGE> 58
its shares of common stock in such registration, subject to the ability of the
underwriters to limit the number of shares included in the offering. We will be
responsible for paying all registration expenses relating to any piggyback
registrations and all but one demand registration.
WARRANTS
We have issued warrants representing the right to purchase our common
stock to the warrant holders set forth below for the number of shares of common
stock and at the exercise price set forth opposite each warrant holders' name.
We have reserved from our authorized but unissued shares a sufficient number of
shares of common stock for issuance upon the exercise of the warrants. As of
December 31, 1999, no warrants have been exercised. The warrants do not confer
upon the warrant holder any voting or other rights of a stockholder of World
Commerce. Except as otherwise indicated, the warrants and all rights thereunder
are freely transferable in whole or in part. Except as otherwise indicated, the
warrants provide for customary anti-dilution provisions in the event of certain
events which may include mergers, consolidations, reorganizations,
reclassifications, stock dividends, stock splits and other changes in our
capital structure. Except as otherwise indicated, the warrant holders are
entitled to certain "piggyback" registration rights enabling them, under
certain conditions, to include the common stock underlying the warrants in a
registration statement in the event that we propose to register any of our
common stock under the Securities Act. The foregoing is a summary of the terms
generally applicable to the warrants, however, the terms of each individual
warrant may vary according to negotiation between us and the various warrant
holders. The following table provides certain information with respect to the
warrants as of December 31, 1999.
<TABLE>
<CAPTION>
EXERCISE PRICE
HOLDER AMOUNT OF SHARES PER SHARE EXPIRATION DATE
- ------------------------------------ ---------------- -------------- ------------------
<S> <C> <C> <C>
Michael W. Poole Trust 100,000(5) $ 2.00(11) January 14, 2009
Poole Carbone Capital Partners, Inc. 50,000(5) 12.00(11) January 14, 2009
Poole Carbone Capital Partners, Inc. 50,000(5) 10.00(11) January 14, 2009
Nils Van Beek(1)(2)(3) 100,000(7) 11.50(11) August 25, 2003
Kenneth B. Cobb II 50,000(6) 2.00(11) December 31, 2004
Kenneth B. Cobb II 50,000(8) 8.00(11) July 29, 2005
Charles Kremp III(1)(2)(3) 250,000(9) 8.00(11) September 30, 2005
Tucker H. Byrd 30,000(5) 8.00(12) October 17, 2009
Elizabeth Walsh(1)(2)(3) 1,000(5) 8.00(12) October 18, 2004
Dole Fresh Flowers, Inc.(1)(2)(3) 1,000,000(10) 7.50(11) December 9, 2009
Interprise Technology Partners(4) 110,000(5) 4.00(13) October 31, 2004
Novelle Consulting, L.L.C.(2)(3) 250,000(5) 12.38(12) April 21, 2003
</TABLE>
- -------------------
(1) The warrant and all rights thereunder may only be transferred by will or
the laws of descent and distribution.
(2) Anti-dilution rights only in the event of stock dividends or stock splits.
(3) No "piggy back" registration rights for any of the shares of our common
stock underlying the warrant.
(4) The warrant represents the right to purchase shares of our Series B
preferred stock, which is convertible on a 1 for 1 basis into our common
stock, subject to customary anti-dilution provisions.
(5) 100% of the shares are immediately exercisable.
(6) 100% of the shares are exercisable as of January 1, 2000.
(7) 25% of the shares are exercisable as of January 1, 2000, 25% of the shares
are exercisable as of January 1, 2001, 25% of the shares are exercisable
as of January 1, 2002, and the remaining 25% of the shares are exercisable
as of August 30, 2003.
56
<PAGE> 59
(8) 100% of the shares are exercisable as of August 1, 2000.
(9) 20,837 shares are exercisable as of December 31, 1999 and 20,833 shares
are exercisable on the last day of each calendar quarter for 11 successive
quarters until September 30, 2002.
(10) 58,337 shares are exercisable as of January 1, 2000, 58,333 shares are
exercisable as of February 1, 2000 and on the first calendar day of each
month for 10 successive months until December 1, 2000 and 25,000 shares
are exercisable as of January 1, 2001 and on the first calendar day of
each month for 11 successive months until December 1, 2001.
(11) The exercise price is payable in cash or any other form of consideration
agreed to by World Commerce and the warrant holder. The exercise price is
also payable in warrants valued at the current market price of our common
stock underlying such warrant on the date of such exercise less the
current warrant price then in effect, or a combination of cash and such
warrants.
(12) The exercise price is payable in cash or any other form of consideration
agreed to by World Commerce and the warrant holder.
(13) The exercise price is payable in cash or in warrants valued at the average
of the closing prices of our common stock reported for the five business
days immediately before notice of exercise is given, or a combination of
cash and such warrants.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND PROVISIONS OF OUR CERTIFICATE OF
INCORPORATION
Provisions of Delaware Law and our certificate of incorporation
summarized below could make more difficult our acquisition by means of a tender
offer, a proxy contest or otherwise in the removal of incumbent officers and
directors. These provisions are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control to first negotiate with us. We believe that
the benefits of increased protection of our potential ability to negotiate with
the proponent of an unfriendly or unsolicited proposal to acquire or
restructure us outweighs the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could result in an
improvement of their terms.
DELAWARE ANTI-TAKEOVER LAW. We are subject to Section 203 of the
Delaware General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless the
"business combination" or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Generally, a
"business combination" includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with
affiliates and associates, owns or within three years prior to the
determination of interested stockholder status, did own, 15.0% or more of a
corporation's voting stock. The existence of this provision may have an
anti-takeover effect with respect to transactions not approved in advance by
the board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.
CERTIFICATE OF INCORPORATION. Our certificate of incorporation
authorizes our board of directors to establish one or more series of preferred
stock and to determine, with respect to any series of preferred stock, the
terms and rights of such series. The authorized shares of preferred stock, as
well as shares of common stock, will be available for issuance without further
action by our stockholders, unless such action is required by applicable laws
or the rules of any stock exchange or automatic quotation system on which our
securities may be listed or traded.
Although our board of directors has no intention at the present time
of doing so, it could issue a series of preferred stock that could, depending
on the terms of such series, impede the completion of a merger, tender offer or
other takeover attempt. Our board of directors will make any determination to
57
<PAGE> 60
issue such shares based on its judgment as to the best interest of World
Commerce and its stockholders. Our board of directors, in so acting, could
issue preferred stock having terms that could discourage an acquisition attempt
through which an acquiror otherwise may be able to change the composition of
our board of directors, including a tender or exchange offer or other
transaction that some, or a majority, of our stockholders might believe to be
in the best interest or in which stockholders might receive a premium for their
stock over the then current market price of such stock.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the common stock is Continental
Stock Transfer & Trust Company.
58
<PAGE> 61
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between the
corporation and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Our certificate of incorporation provides that, pursuant to Delaware
law, our directors and officers shall not be liable for monetary damages for
breach of the their fiduciary duty as directors or officers to World Commerce
and its stockholders. This provision in the Certificate of Incorporation does
not eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director and officer will
continue to be subject to liability for breach of their duty of loyalty to us
for acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
We have entered into indemnification agreements with our directors and
executive officers, in addition to the indemnification provided for in our
Certificate of Incorporation, and intend to enter into indemnification
agreements with any new directors and executive officers in the future. The
indemnification agreements provide the directors and executive officers with
further indemnification to the maximum extent permitted by the Delaware General
Corporation Law.
59
<PAGE> 62
ITEM 13. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS.
The financial statements filed as part of this registration statement
are listed in the Index to Financial Statements on page F-1 and are attached
hereto immediately thereafter.
(B) EXHIBITS.
The exhibits filed as part of this registration statement are listed
below and in the Exhibit Index and are attached hereto immediately following
the Exhibit Index.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ----------- -----------------------
<S> <C>
2.1 Agreement and Plan of Merger between World Commerce Online, a
Nevada corporation and World Commerce Online, a Delaware
corporation, dated September 30, 1999
2.2 Acquisition Agreement dated as of September 10, 1998 between
World Commerce Online, Inc., a Nevada corporation and Sunrise
Express, Inc., a Nevada corporation
3.1 Certificate of Incorporation of World Commerce Online
3.2 Certificate of Amendment of Certificate of Incorporation
amending Certificate of Designations of Series A Preferred
Stock
3.3 Bylaws
3.4 Stock Purchase Agreement for Series A Preferred Stock, dated
March 30, 1999
3.5 Stock Purchase Agreement for Series B Preferred Stock, dated
November 11, 1999
3.6 Certificate of Designations of Series B Preferred Stock
3.7 Registration Rights Agreement for Series A and B Preferred Stock,
dated November 11, 1999
4.1 Form of Common Stock Certificate
4.2 Warrant Agreement in favor of Poole Carbone Capital Partners,
dated January 15, 1999
4.3 Warrant Agreement in favor of Poole Carbone Capital Partners,
dated January 15, 1999
4.4 Warrant Agreement in favor of Michael W. Poole Trust, dated
January 15, 1999
4.5 Warrant Agreement in favor of Novelle Consulting, L.L.C., dated
April 22, 1999
4.6 Warrant Agreement in favor of Kenneth B. Cobb II, dated September
20, 1999
4.7 Warrant Agreement in favor of Kenneth B. Cobb II, dated September
20, 1999
4.8 Warrant Agreement in favor of Charles Kremp, III, dated as of
October 1, 1999
4.9 Warrant Agreement in favor of Interprise Technology Partners,
L.P., dated October 15, 1999
4.10 Warrant Agreement in favor of Tucker Byrd, dated October 18, 1999
4.11 Warrant Agreement in favor of Liz Walsh, dated October 18, 1999
4.12 Warrant Agreement in favor of Nils Van Beek, dated August 26,
1999
</TABLE>
60
<PAGE> 63
<TABLE>
<CAPTION>
<S> <C>
4.13 Warrant Agreement in favor of Dole Fresh Flowers, dated December
10, 1999
10.1 1999 Stock Option Plan
10.2 Form of Executive Incentive Stock Option Agreement
10.3 Form of Executive Non-Qualified Stock Option Agreement
10.4 Form of Non-Executive Incentive Stock Option Agreement
10.5 Form of Non-Executive Non-Qualified Stock Option Agreement
10.6 Form of Indemnification Agreement for officers and directors
10.7 Corporate Headquarters Lease Agreement, dated February 15, 1999
10.8 Consulting Agreement with AnswerThink, Inc., dated August 11, 1999
10.9 Stock Purchase Agreement by and among World Commerce Online,
Fresh Products Network, Omniflora International Ltd., Jobo
Holding B.V. and Nils Van Beek, dated August 26, 1999
10.10 Consulting Agreement with Jobo Holding B.V., dated August 26, 1999
10.11 1st Amendment to Corporate Headquarter Lease Agreement, dated
September 7, 1999
10.12 Consulting Agreement with Charles Kremp, III, dated as of
October 1, 1999
10.13 Demonstration License Agreement with AnswerThink, Inc., dated
October 4, 1999
10.14 Web Site Development Agreement with Snickleways Interactive, dated
October 14, 1999
10.15 Employment Agreement with Robert H. Shaw, dated as of
October 18, 1999
10.16 Employment Agreement with Mark E. Patten, dated as of
October 18, 1999
10.17 Employment Agreement with J. Keith Money, dated as of
October 18, 1999
10.18 Employment Agreement with Henry R. Winogrond, dated as of
October 18, 1999
10.19 Employment Agreement with John R. Daniel II, dated as of
October 18, 1999
10.20 Employment Agreement with Eugenio M. Valdes, dated as of
October 18, 1999
10.21 Employment Agreement with Jacobus N. Kras, dated as of
October 18, 1999
10.22 Floraplex User Agreement with Dole Fresh Flowers, dated
December 10, 1999
10.23 Master Outsourced Services Agreement with eCredit.com, Inc., dated
December 30, 1999
21.1 Subsidiaries
27.1 Financial Data Schedule
</TABLE>
61
<PAGE> 64
WORLD COMMERCE ONLINE AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND
FOR THE PERIOD MARCH 30, 1994 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 1999
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants F-2
Consolidated Financial Statements:
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholders' Deficit F-5
Consolidated Statements of Cash Flows F-9
Notes to Consolidated Financial Statements F-11
</TABLE>
F-1
<PAGE> 65
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
World Commerce Online, Inc. and Subsidiaries
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' deficit and cash flows
present fairly, in all material respects, the consolidated financial position
of World Commerce Online, Inc. and Subsidiaries (a development stage company)
at December 31, 1999 and 1998, and the results of their operations and their
cash flows for the years ended December 31, 1999, 1998, 1997 and for the period
from March 30, 1994 (date of inception) through December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Tampa, Florida
February 9, 2000
F-2
<PAGE> 66
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1999 1998
- ---------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $10,553,021 $ 42,335
Prepaid expenses and other current assets 232,754 1,597
Receivable from investors 3,785,000 -
----------- ------------
Total current assets 14,570,775 43,932
Property and equipment, net 6,477,743 57,312
Intangible assets, net 1,648,971 -
Other assets 24,238 -
----------- ------------
Total assets $22,721,727 $ 101,244
=========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 1,855,185 $ 176,308
Accrued compensation and benefits 372,075 30,852
Capital lease obligation, current 71,611 11,467
----------- ------------
Total current liabilities 2,298,871 218,627
Long-term liabilities:
Capital lease obligation 91,927 26,983
Redeemable convertible preferred stock:
Preferred stock Series A, $0.001 par value; authorized 4,250,000
shares, issued and outstanding 4,000,000 shares at December 31, 1999,
stated at liquidation value, net of related costs 7,978,211 -
Preferred stock Series B, $0.001, par value; authorized 5,110,000
shares, issued and outstanding 5,000,000 shares at December 31, 1999,
stated at liquidation value, net of related costs 19,620,772 -
----------- ------------
Total redeemable convertible preferred stock 27,598,983 -
Stockholders' deficit:
Common stock, $0.001 par value; authorized 90,000,000 shares, issued
and outstanding 15,435,357 and 14,815,000 shares at December 31, 1999
and 1998, respectively 15,435 14,815
Additional paid-in capital 43,065,539 4,642,623
Deferred stock-based compensation (4,863,980) -
Deficit accumulated during the development stage (45,439,328) (4,801,804)
Accumulated comprehensive loss (45,720) -
----------- ------------
Total stockholders' deficit (7,268,054) (144,366)
----------- ------------
Total Liabilities and Stockholders' Deficit $22,721,727 $ 101,244
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 67
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 30,
1994 (DATE
OF INCEPTION)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1999 1998 1997 1999
---------- ----------- --------- --------------
<S> <C> <C> <C> <C>
Revenues:
Advertising revenue $ 14,145 $ - $ - $ 14,145
Subscription revenue 7,909 - - 7,909
Transaction revenue 21,076 - - 21,076
Floral product revenue - - - 350,130
Other revenue - 292,406 90,185 382,669
------------ ----------- --------- ------------
Total revenues 43,130 292,406 90,185 775,929
------------ ----------- --------- ------------
Costs and operating expenses:
Cost of floral product - - - 308,749
Product and technology development 2,884,727 381,192 136,089 3,470,606
Sales and marketing 5,250,884 316,966 81,954 5,834,021
General and administrative 3,848,221 3,223,123 507,342 7,932,957
Depreciation and amortization 474,106 7,401 1,888 485,224
------------ ----------- --------- ------------
Total costs and operating expenses 12,457,938 3,928,682 727,273 18,031,557
------------ ----------- --------- ------------
Loss from operations (12,414,808) (3,636,276) (637,088) (17,255,628)
Net interest expense (166,129) (4,026) - (177,113)
Other non-operating income (expense) (56,587) 50,000 - (6,587)
------------ ----------- --------- ------------
Net loss $(12,637,524) $(3,590,302) $(637,088) $(17,439,328)
Deemed dividend on redeemable convertible
preferred stock (28,000,000) - -
------------ ----------- ---------
Net loss available to common stockholders (40,637,524) $(3,590,302) $(637,088)
============ =========== ========= ============
Basic and diluted net loss per common share $ (2.66) $ (0.39) $ (0.09)
============ =========== =========
Weighted average number of shares used in
computing basic and diluted net loss
per common share 15,271,152 9,181,923 6,930,865
============ =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 68
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFERRED
PRICE PER ----------------------- PAID-IN TREASURY STOCK-BASED
DATE SHARE SHARES AMOUNT CAPITAL STOCK COMPENSATION
----------- ---------- --------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial sale of common stock 11/94 $.02 3,150,000 $ 3,150 $ 56,850 $ - $ -
Comprehensive Loss:
Net loss for the period March 30,
1994 (date of inception) through
December 31, 1994 - - - - -
--------- ---------- ----------- --------- ------------
Total comprehensive loss
Balance, December 31, 1994 3,150,000 $ 3,150 $ 56,850 $ - $ -
Sales of common stock 7/95-11/95 .08 504,000 504 39,496 - -
Issuances of common stock in exchange
for professional services 7/95 .08 846,000 846 66,297 - -
Comprehensive Loss:
Net loss - - - - -
--------- ---------- ----------- --------- ------------
Total comprehensive loss
Balance, December 31, 1995 4,500,000 $ 4,500 $ 162,643 $ - $ -
Common stock for loan 5/96 .02 1,350,000 1,350 28,195 - -
Sales of common stock 8/96 .10 675,000 675 69,325 - -
8/96 .83 90,000 90 74,910 - -
Issuances of common stock in exchange
for professional services 12/96 .83 90,000 90 74,910 - -
Comprehensive Loss:
Net loss - - - - -
--------- ---------- ----------- --------- ------------
Total comprehensive loss
Balance, December 31, 1996 6,705,000 $ 6,705 $ 409,983 $ - $ -
Issuances of common stock in exchange
for professional services 4/97 .56 225,000 225 124,775 - -
Transfer of shares by principal
shareholders for the benefit of the
Company - - 225,000 - -
Sales of common stock 7/97 .42 90,000 90 37,410 - -
Repurchase of treasury shares (20
shares) - - - (20,000) -
Reissuance of treasury stock (20
shares) - - 17,500 20,000 -
Comprehensive Loss:
Net loss - - - - -
--------- ---------- ----------- --------- ------------
Total comprehensive loss
Balance, December 31, 1997 7,020,000 $ 7,020 $ 814,668 $ - $ -
Sales of common stock 9/98-12/98 .50 1,225,000 1,225 611,275 - -
Transfer of shares by principal share
holders for the benefit of the
Company - - - - 124,750 - -
Issuances of common stock in exchange 9/98 .50 3,380,000 3,380 1,686,620 - -
for professional services 10/98-12/98 2.25 305,000 305 685,945 - -
11/98 1.73 23,650 24 40,891 - -
12/98 2.50 230,000 230 574,770 - -
Common stock issued in satisfaction
of shareholder loans 10/98 .52 100,000 100 51,900 - -
Common stock issued in connection 11/98 1.73 31,350 31 54,304 - -
with reverse merger with public
shell - - 2,500,000 2,500 (2,500) - -
Comprehensive Loss:
Net loss - - - - -
--------- ---------- ----------- --------- ------------
Total comprehensive loss
Balance, December 31, 1998 14,815,000 $ 14,815 $ 4,642,623 $ - $ -
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 69
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFERRED
PRICE PER ----------------------- PAID-IN TREASURY STOCK-BASED
DATE SHARE SHARES AMOUNT CAPITAL STOCK COMPENSATION
----------- ---------- --------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales of common stock 1/99 .50 390,000 390 194,610 - -
Stock grant to employee 10/99 5.38 25,000 25 134,350 - -
Issuances of common stock in
exchange for professional
services 4/99-10/99 7.00-11.75 105,000 105 1,217,395 - -
Acquisition of FPN 8/99 11.26 100,000 100 1,126,150 - -
Issuances of warrants to employees
and directors 1/99-9/99 - - 425,770 - -
Issuances of warrants for
professional services 1/99-12/99 - - 872,735 - -
Deemed dividend on convertible
preferred stock - - 28,000,000 - -
Stock based compensation, net of
amortization of deferred compensation - - 6,451,906 - (4,863,980)
Comprehensive Loss:
Net loss - - - - -
Foreign currency translation
adjustment - - - - -
--------- ---------- ----------- --------- ------------
Total comprehensive loss
Balance, December 31, 1999 15,435,000 $ 15,435 $43,065,539 $ - $ (4,863,980)
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 70
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (CONTINUED)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED ACCUMULATED
DURING THE OTHER
COMPREHENSIVE DEVELOPMENT COMPREHENSIVE
LOSS STAGE LOSS TOTAL
-------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
Initial sale of common stock $ - $ - $ 60,000
Comprehensive Loss:
Net loss for the period March 30, 1994 (date
of inception) through December 31, 1994 (41,215) (41,215) - (41,215)
------------- ------------- ------------- ----------
Total comprehensive loss $ (41,215)
=============
Balance, December 31, 1994 $ (41,215) $ - $ 18,785
Sales of common stock - - 40,000
Issuances of common stock in exchange for
professional services - - 67,143
Comprehensive Loss:
Net loss (212,865) (212,865) - (212,865)
------------- ------------- ------------- ----------
Total comprehensive loss $ (212,865)
=============
Balance, December 31, 1995 $ (254,080) $ - $ (86,937)
Common stock for loan - - 29,545
Sales of common stock - - 70,000
- - 75,000
Issuances of common stock in exchange for
professional services - - 75,000
Comprehensive Loss:
Net loss (320,334) (320,334) - (320,334)
------------- ------------- ------------- ----------
Total comprehensive loss $ (320,334)
=============
Balance, December 31, 1996 $ (574,414) $ - $ (157,726)
Issuances of common stock in exchange for
professional services - - 125,000
Transfer of shares by principal shareholders for
the benefit of the Company - - 225,000
Sales of common stock - - 37,500
Repurchase of treasury shares (20 shares) - - (20,000)
Reissuance of treasury stock (20 shares) - - 37,500
Comprehensive Loss:
Net loss (637,088) (637,088) - (637,088)
------------- ------------- ------------- ----------
Total comprehensive loss $ (637,088)
=============
Balance, December 31, 1997 $ (1,211,502) $ - $ (389,814)
Sales of common stock - - 612,500
Transfer of shares by principal shareholders for
the benefit of the Company - - 124,750
Issuances of common stock in exchange for - - 1,690,000
professional services - - 686,250
- - 40,915
- - 575,000
Common stock issued in satisfaction of
shareholder loans - - 52,000
Common stock issued in connection with reverse
merger with public shell - - 54,335
Comprehensive Loss:
Net loss (3,590,302) (3,590,302) - (3,590,302)
------------- ------------- ------------- ----------
Total comprehensive loss $ (3,590,302)
=============
Balance, December 31, 1998 $ (4,801,804) $ - $ (144,366)
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 71
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (CONTINUED)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED ACCUMULATED
DURING THE OTHER
COMPREHENSIVE DEVELOPMENT COMPREHENSIVE
LOSS STAGE LOSS TOTAL
-------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Sales of common stock - - $ 195,000
Stock grant to employee - - 134,375
Issuances of common stock in exchange for
professional services - - 1,217,500
Acquisition of FPN - - 1,126,250
Issuances of warrants to employees and
directors - - 425,770
Issuances of warrants for professional
services - - 872,735
Deemed dividend on convertible
preferred stock (28,000,000) - -
Stock based compensation, net of amortization of
deferred compensation - - 1,587,926
Comprehensive Loss:
Net loss (12,637,524) (12,637,524) - (12,637,524)
Foreign currency translation adjustment (45,720) - (45,720) (45,720)
------------- ------------- ------------- -----------
Total comprehensive loss $(12,683,244)
=============
Balance, December 31, 1999 $ (45,439,328) $ (45,720) $(7,268,054)
============= ============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE> 72
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 30,
1994 (DATE
OF INCEPTION)
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1999 1998 1997 1999
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(12,637,524) $ (3,590,302) $ (637,088) $(17,439,328)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 474,106 7,401 1,888 485,224
Provision for doubtful accounts -- 4,200 29,981 40,322
Stock-based compensation 2,100,426 -- -- 2,100,426
Loss on retirement of property & equipment 18,609 -- -- 30,109
Loss on foreign currency translation 30,071 -- -- 30,071
Gain on forgiveness of debt -- (50,000) -- (50,000)
Professional fees paid through the issuance
of common stock and warrants 405,810 3,159,850 350,000 4,057,803
Interest paid through the issuance of warrants 151,800 -- -- 151,800
Change in operating assets & liabilities:
Accounts receivable -- (4,200) (29,981) (40,322)
Prepaid expenses & other current assets (231,157) (724) (873) (232,754)
Other assets (24,238) -- -- (24,238)
Accounts payable and accrued liabilities 1,587,466 30,477 11,281 1,763,774
Unearned development fees -- (107,172) 75,650 --
Accrued compensation and benefits 341,223 18,833 10,133 372,075
------------ ------------ ------------ ------------
Net cash used in operating activities (7,783,408) (531,637) (189,009) (8,755,038)
------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchase of property and equipment and
software development (5,663,678) (15,376) (2,998) (5,700,592)
------------ ------------ ------------ ------------
Net cash used in investing activities (5,663,678) (15,376) (2,998) (5,700,592)
------------ ------------ ------------ ------------
Cash flows from financing activities:
Issuance of common stock 195,000 612,500 75,000 1,127,500
Issuance of redeemable convertible
preferred stock, net of related expenses 21,447,983 -- -- 21,447,983
Purchase of treasury stock -- -- (20,000) (20,000)
Proceeds from shareholder loans -- -- 99,900 132,693
Proceeds from other debt 2,366,000 50,000 -- 2,445,545
Payments on shareholder loans -- (69,293) -- (69,293)
Payments on capital leases (51,211) (4,566) -- (55,777)
------------ ------------ ------------ ------------
Net cash provided by financing activities 23,957,772 588,641 154,900 25,008,651
------------ ------------ ------------ ------------
Net change in cash 10,510,686 41,628 (37,107) 10,553,021
Cash and cash equivalents, beginning of period 42,335 707 37,814 --
------------ ------------ ------------ ------------
Cash and cash equivalents, end of period $ 10,553,021 $ 42,335 $ 707 $ 10,553,021
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-9
<PAGE> 73
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 30,
1994 (DATE
OF INCEPTION)
YEAR ENDED DECEMBER 31 THROUGH
--------------------------------------------- DECEMBER 31,
1999 1998 1997 1999
------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for interest $ 39,059 $ 3,419 $ - $ 42,478
============ ============= ============ =============
Noncash investing and financing:
Equipment acquired through capital leases $ 176,299 $ 43,016 $ - $ 219,315
============ ============= ============ =============
Common stock and warrants issued in exchange for
professional services $ 1,354,810 $ 3,035,100 $ 125,000 $ 4,653,278
============ ============= ============ =============
Common stock issued for extinguishment of
shareholder debt $ - $ 63,400 $ - $ 63,400
============ ============= ============ =============
Common stock issued for extinguishment of debt $ - $ - $ - $ 29,545
============ ============= ============ =============
Preferred stock issued for extinguishment of other
debt $ 2,366,000 $ - $ - $ 2,366,000
============ ============= ============ =============
Warrants issued in connection with other debt $ 151,800 $ - $ - $ 151,800
============ ============= ============ =============
Common stock transferred by principal shareholder
for the benefit of the Company $ - $ 62,375 $ 225,000 $ 287,375
============ ============= ============ =============
Common stock issued in reverse merger $ - $ 2,500 $ - $ 2,500
============ ============= ============ =============
Common stock issued as consideration for purchase of
FPN $ 1,126,150 $ - $ - $ 1,126,150
============ ============= ============ =============
Common stock and warrant issued in exchange for
covenant not to compete $ 635,270 $ - $ - $ 635,270
============ ============= ============ =============
Preferred stock sold in exchange for note receivable $ 3,785,000 $ - $ - $ 3,785,000
============ ============= ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
F-10
<PAGE> 74
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS:
World Commerce Online, Inc. and its consolidated subsidiaries (the
"Company") is a provider of business-to-business electronic commerce
solutions to the perishable products industries. The Company provides
its customers with access to the Company's secure Internet-based
trading systems and to industry-specific Internet communities supplying
comprehensive industry data and information resources as well as
communication tools.
The Company is in the development stage. From 1994 through 1996, the
Company generated revenue through activities outside of the Company's
planned principal operations including the sale of imported fresh cut
flowers and during 1997 and 1998 through Internet site development
services provided to a company affiliated through common ownership.
Since the third quarter of 1998, the Company has devoted substantially
all of its efforts to develop its technology, market brand and sales
operations. Planned principal operations have commenced, but have not
produced significant revenue in 1999. The Company plans to generate
revenues from its B2B e-commerce business from three primary sources:
transaction fees, subscription fees and advertising revenue.
The Company has experienced operating losses since its inception.
Additional operating losses are anticipated for the next several years
as the Company expands its operations, sales and marketing activities
and product technology development.
2. CAPITAL TRANSACTIONS AND BASIS OF PRESENTATION:
The Floral Foundation, Inc. was organized under the laws of the State
of Florida on March 30, 1994 and changed its name to World Commerce
Online, Inc. ("WCO") on July 22, 1996. In September 1998, Sunrise
Express, Inc. ("Sunrise"), a Nevada public shell corporation, acquired
all of the outstanding common stock of WCO in exchange for 7,020,000
shares of Sunrise stock. Since the shareholders of WCO received the
majority voting interests in the combined company, the acquisition has
been treated as a recapitalization of WCO with WCO as the acquiring
enterprise for accounting and financial reporting purposes. The
transaction was recorded as a reverse acquisition using the purchase
method of accounting whereby equity of WCO was adjusted for the fair
value of the acquired tangible net assets of Sunrise. The 2,500,000
shares of the common stock of Sunrise outstanding prior to the merger
have been shown as an issuance in 1998 with no assigned value, given
that there were no net tangible assets received. The historical
financial statements prior to 1998 are those of WCO. Immediately
following the acquisition of WCO, Sunrise changed its name to World
Commerce Online, Inc., a Nevada corporation. Pro forma information is
not presented since this combination is treated as an issuance of
shares rather than a business combination.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of World Commerce Online, Inc. and its
wholly owned subsidiaries under common control. All significant
intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents - The Company considers all highly liquid
instruments with a maturity of three months or less at time of purchase
to be cash equivalents.
Income Taxes - Income taxes are accounted for under the asset and
liability method. Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at each
year-end based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax
expense is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
F-11
<PAGE> 75
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Property and Equipment - Property and equipment, stated at cost, is
comprised of computer and office equipment. Gains and losses on
disposition are recognized in the year of the disposal. Expenditures
for maintenance and repairs are expensed as incurred.
Depreciation is computed using the straight-line method over the
following estimated lives:
<TABLE>
<S> <C>
Computer software 3 years
Furniture, fixtures and computer hardware 5 years
</TABLE>
Revenue Recognition - The Company recognizes revenues at the time that
services are performed. Transaction fee and subscription fee revenue
are recognized as they are earned. Advertising revenues are recognized
in the period in which the advertisement is displayed.
Computer Software Costs - The Company has adopted Statement of Position
("SOP") 98-1, which requires computer software costs associated with
internal use software to be charged to operations as incurred until
certain capitalization criteria are met. Costs incurred in the
preliminary project stage of software development have been expensed as
incurred. Costs incurred in the application development stage have been
capitalized. As of December 31, 1999, $4,762,191 has been capitalized
and is included in property and equipment in the accompanying
consolidated balance sheets.
Advertising Costs - Advertising costs are expensed as incurred.
Advertising expenditures reflected in the accompanying consolidated
statements of operations amounted to approximately $255,900, $5,000,
$-0- and $260,900 for the years ended December 31, 1999, 1998, 1997 and
the period from March 30, 1994 (date of inception) through December 31,
1999, respectively.
Net Loss per Share - Basic net loss per share is computed by dividing
net loss available to common stockholders by the weighted average number
of common shares outstanding during the period. Dilutive net loss per
share is computed using the weighted average number of common shares
outstanding during the period, plus the dilutive effect of common stock
equivalents. Common stock equivalent shares consist of convertible
preferred stock, stock options and warrants. For the year ended December
31, 1999, options to purchase 2,813,800 shares of common stock,
preferred stock convertible into 9,000,000 shares of common stock,
warrants to purchase 1,931,000 shares of common stock an option to
purchase 250,000 shares of preferred stock convertible into 250,000
shares of common stock, and warrants to purchase 110,000 shares of
preferred stock convertible into 110,000 shares of common stock were
excluded from the calculation of earnings per share since their
inclusion would be antidilutive.
Intangible Assets - The Company periodically reevaluates the
recoverability of intangible assets as well as the amortization periods
to determine whether an adjustment to carrying value or a revision to
estimated useful lives is appropriate. The primary indicators of
recoverability are a significant event or change in the environment in
which the business operates, and current and forecasted undiscounted
operating cash flows.
Foreign Currency - The financial transactions of subsidiaries located
outside of the United States, are generally measured using the local
currency as the functional currency. Assets, including goodwill, and
liabilities of these subsidiaries are translated at the rates of
exchange at the balance sheet date. The resultant translation
adjustments are in accumulated foreign currency translation adjustment,
a separate component of stockholders' deficit. Income and expense items
are translated at average monthly rates of exchange.
Stock-Based compensation - The Company accounts for employee
stock-based compensation using the intrinsic value method. Stock-based
compensation to non-employees is accounted for using the fair value
method. The Company also provides disclosure of certain pro forma
information as if the Company accounted for its employee stock-based
compensation using the fair value method.
F-12
<PAGE> 76
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
When options are granted to employees, a non-cash charge representing
the difference, if any, between the exercise price and the fair value
of the common stock underlying the vested options on the date of grant
is recorded as stock-based compensation expense and the balance is
deferred and amortized over the remaining vesting period.
Other Comprehensive Income - The Company has adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," which established standards for reporting and displaying
comprehensive income and its components in a financial statement with
the same prominence as the other financial statements. The Company's
only item of other comprehensive income is foreign currency translation
adjustment which has been reported separately within stockholders'
deficit.
Fair Value of Financial Instruments - The carrying amounts of the
Company's financial instruments, which include cash and cash
equivalents, receivable from investors, accounts payable and accrued
liabilities and capital lease obligation approximate their fair values
at December 31, 1999 and 1998 due to the short maturities of these
instruments. The fair value of the convertible preferred stock
approximated the carrying value at December 31, 1999.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Recent Accounting Pronouncement - In June 1998, the FASB issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes accounting and reporting standards for
derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The Company, to date, has not engaged in derivative and hedging
activities, and accordingly does not believe that the adoption of SFAS
No. 133 will have a material impact on the financial reporting and
related disclosures of the Company. The Company will adopt SFAS No. 133
as required by SFAS No. 137, "Deferral of the Effective Date of the
FASB Statement No. 133," in fiscal year 2001.
Concentration of Credit Risk - Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily
of cash, and cash equivalents. The Company maintains the majority of
its cash balances at one financial institution.
4. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
---------- -------
<S> <C> <C>
Computer software $4,762,191 $11,114
Furniture, fixtures and computer hardware 1,844,141 14,300
Furniture and equipment under capital lease 218,988 43,016
---------- -------
6,825,320 68,430
Less accumulated depreciation (347,577) (11,118)
---------- -------
$6,477,743 $57,312
========== =======
</TABLE>
Accumulated amortization on capital leases at December 31, 1999 and
1998 is $44,376 and $4,313, respectively.
F-13
<PAGE> 77
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITION TRANSACTION:
On August 26, 1999, the Company acquired Fresh Products Network B.V.
("FPN"). The Company acquired the entire equity interest in the business
for a purchase price of approximately $1,500,000 through the issuance of
100,000 shares of Company common stock, $336,000 in assumed liabilities,
and contingent consideration of 100,000 shares of Company common stock.
Delivery of contingent shares is dependent upon FPN achieving certain
operational milestones by December 31, 2000. Management of the Company
has determined that the contingent consideration will be recorded as an
additional cost of the acquisition when satisfaction of the contingency
is considered probable. The purchase method of accounting was followed
in accounting for this transaction. The goodwill associated with the
acquisition is being amortized on a straight-line basis over 5 years.
Operations of FPN from September 1, 1999 through year-end 1999 are
included in the accompanying consolidated statements of income.
Unaudited pro forma net loss and loss per share (basic and diluted) are
$(12,750,197) and $(0.83), respectively, and represent the combined
results of operations of the Company and FPN, as if the acquisition had
occurred at the beginning of July 1999 (FPN's formation date). The pro
forma amounts do not necessarily reflect the results of operations as
they would have been if the businesses had constituted a single entity
during the period and is not necessarily indicative of results which
may be obtained in the future.
6. INTANGIBLE ASSETS:
Intangible assets consist of goodwill and a covenant not to compete,
totaling $1,648,971 as of December 31, 1999. In connection with the
acquisition of FPN, consideration paid exceeded the estimated value of
the assets acquired (including estimated liabilities assumed as part of
the transaction) by approximately $1,218,000. As of December 31, 1999,
no additional goodwill had been recorded relative to the contingent
consideration discussed in Note 5 above. The amount of excess
consideration paid over net asset value amortized was $81,177 in 1999.
The Company issued a warrant to purchase 100,000 shares of common stock
and a stock grant of 20,000 shares to a consultant of the Company in
exchange for a covenant not to compete valued at $635,270 based on the
intrinsic value of the common stock on the date of grant and the fair
value of the warrants on the date of grant based on a Black Scholes
option pricing model. The covenant not to compete is being amortized
over the four-year term of the agreement. Amortization expense related
to the covenant not to compete was $52,939 in 1999.
7. NOTES PAYABLE:
The Company has received loans from shareholders during the development
stage period to finance activities. Shareholder loans carried no
interest rate or repayment terms. All shareholder loans were repaid
during 1998 through the issuance of stock or payment of cash.
The Company received a loan for $50,000 from a company affiliated
through common ownership during 1998 that was used to extinguish a
shareholder loan. This debt was forgiven in 1998, and the gain on
forgiveness of debt is included in other non-operating income in the
accompanying consolidated statements of operations.
8. LEASES:
The Company has operating lease agreements primarily involving its
office facilities. The Company has various equipment under capital
lease agreements. Commitments for minimum rentals under non-cancelable
leases at December 31, 1999 are as follows:
F-14
<PAGE> 78
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. LEASES (CONTINUED):
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
----------- ---------
<S> <C> <C>
2000 $ 308,392 $ 91,939
2001 316,923 56,537
2002 309,958 29,775
2003 65,867 19,590
2004 - 4,341
----------- ---------
Total minimum payments $ 1,001,140 202,182
===========
Less amount representing interest (38,644)
---------
Present value of minimum lease payment 163,538
Less current portion (71,611)
---------
Long-term capital lease obligation $ 91,927
=========
</TABLE>
Rent expense was $301,000, $46,000, $12,000 and $373,000 for the years
ended December 31, 1999, 1998, 1997 and the period from March 30, 1994
(date of inception) through December 31, 1999, respectively.
9. STOCK OPTION PLAN:
The World Commerce Online, Inc. 1999 Stock Option Plan (the "Plan") was
adopted by the Company's shareholders in October 1999. The Plan covers
up to 3.0 million shares of common stock and permits the Company to
grant to employees, directors, officers, and consultants of the Company
and its subsidiaries: (i) incentive stock options ("ISOs") and (ii)
nonqualified stock options ("NSOs"). The Plan is administered by the
Compensation Committee of the Board of Directors, which also selects
the individuals who receive grants under the plan. As of December 31,
1999, the grants that had been made under the Plan were NSOs and ISOs.
The exercise price, term, and vesting schedule for options granted
under the Plan are set by the Compensation Committee, subject to
certain limitations. Under the Plan, the exercise price of an ISO may
not be less than the fair market value of the shares of common stock at
the date of grant (110% if the ISO is granted to a greater than 10%
shareholder), and the term of an option may not exceed 10 years (5
years if an ISO is granted to a greater than 10% shareholder). Unless
otherwise specified by the Compensation Committee, options become 25%
vested after 12 months from the date of grant and thereafter vest pro
rata in arrears over 48 months. Options generally terminate 3 months
after the termination of the option holder's employment unless
terminated for cause.
For the year ended December 31, 1999, the Company recognized $1,587,926
of stock-based compensation expense related to options and expects to
recognize $4,863,980 over the remaining vesting period of the options.
F-15
<PAGE> 79
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTION PLAN (CONTINUED):
The following table summarizes the status of the Company's Stock Option
Plan:
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
--------------------------------
Weighted Average
Shares Exercise Price
--------- ----------------
<S> <C> <C>
Outstanding options beginning of year............................. -- --
Granted:.......................................................... 2,813,800 $ 3.76
Exercised:........................................................ -- --
Forfeited:........................................................ -- --
Outstanding at year end:.......................................... 2,813,800 $ 3.76
Exercisable at year end:.......................................... -- --
Weighted average fair value of options granted during the year.... $ 3.98
</TABLE>
The following table summarizes the status of the Plan for options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Total Weighted Average Weighted Average
Range of Exercise Prices Outstanding Remaining Contractual Life (Years) Exercise Price
------------------------ ----------- ---------------------------------- ----------------
<S> <C> <C> <C>
$2.00 1,911,676 10 $ 2.00
$5.38 211,248 10 $ 5.38
$7.13 - $8.00 635,876 10 $ 7.93
$9.00 - $11.75 55,000 10 $ 10.25
---------
Total 2,813,800 $ 3.76
=========
</TABLE>
Included in the preceding table are 1,911,676 stock options with a
weighted average exercise price of $2.00 and a weighted average
remaining contractual life of 10 years. The exercise price of such
stock options was less than the grant date fair value of the underlying
common stock.
Also included in the preceding table are 635,876 stock options with a
weighted average exercise price of $8.00 and a weighted average
remaining contractual life of 10 years. The exercise price of such
options was greater than the grant date fair value of the underlying
common stock.
The Company has adopted the disclosure-only provisions of SFAS No. 123.
Had compensation cost for the Plan been accounted for based on the fair
value at the grant date, consistent with provisions of SFAS No. 123, the
Company's net loss and net loss per share would have been increased to
the pro forma amounts below:
<TABLE>
<CAPTION>
Year Ended
(in thousands except per share amounts) December 31, 1999
--------------------------------------------------------------------------------- -----------------
<S> <C>
Net loss-- as reported........................................................... $(12,637,524)
Net loss-- pro forma............................................................. $(13,608,325)
Net loss per share-- as reported................................................. $ (0.83)
Net loss per share-- pro forma................................................... $ (0.89)
</TABLE>
F-16
<PAGE> 80
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. STOCK OPTION PLAN (CONTINUED):
The effects of applying SFAS No. 123 for the presentation of pro forma
disclosures are not necessarily indicative of the effects on reported
net income for future years.
The fair value of options granted in 1999 were estimated using the
Black-Scholes option pricing model as of the date of grant with the
following assumptions: expected lives of 4 years; expected volatility
of 80%; expected dividend yield of 0% and a risk-free interest rate of
6.53%.
10. EQUITY TRANSACTIONS:
The authorized capital stock of the Company consists of (i) 90,000,000
shares of voting common stock ("Common Stock") authorized for issuance
with a par value of $0.001 and (ii) 10,000,000 shares of preferred
stock with a par value of $0.001, of which 4,250,000 are designated as
Series A redeemable convertible preferred stock ("Series A") and
5,110,000 shares are designated as Series B redeemable convertible
preferred stock ("Series B").
Common Stock
The common shares authorized, issued and outstanding have been
retroactively restated for the reverse acquisition discussed in Note 2.
At December 31, 1999, 11,000,000 shares of the outstanding common
shares are restricted.
Warrants
In January 1999, the Company issued to a director of the Company, a
warrant representing the right to purchase 100,000 shares of common
stock at an exercise price of $2 per share. The estimated fair value of
the warrant based upon the intrinsic value method equalled $87,500 and
is recorded as general and administrative expense. In addition, the
Company issued to a company controlled by the director two warrants each
representing the right to purchase 50,000 shares of our common stock at
exercise prices of $12 and $10 per share, respectively. The warrants
vested immediately upon issuance and expire on January 14, 2009. The
estimated fair values of the warrants based on a Black Scholes option
pricing model are $6,000 and $3,800, respectively. These amounts were
recorded as general and administrative expense during the year ended
December 31, 1999.
In April 1999, the Company issued to a consultant of the Company, a
warrant representing the right to purchase 250,000 shares of common
stock at an exercise price of $12.38 per share. The warrant vested
immediately. The estimated fair value of this warrant based on a Black
Scholes option pricing model is $276,560 and was recorded as sales and
marketing expense during the year ended December 31, 1999.
In August 1999, the Company issued to a former owner of FPN, an employee
of the Company as of the acquisition date, a warrant representing the
right to purchase 100,000 shares of common stock at an exercise price of
$11.50 per share. The warrant vests 25% a year over a four year period
beginning January 1, 2000. The estimated fair market value of the
warrant based upon the intrinsic value method did not result in the
recognition of expense.
In September 1999, the Company issued to an employee warrants to
purchase a total of 100,000 shares of common stock, each warrant
representing the right to acquire 50,000 shares at exercise prices of $2
and $8 per share. The warrants vest on January 1, 2000 and August 1,
2000, respectively, and expire on December 31, 2004 and July 29, 2005,
respectively. The estimated fair value of the warrants based upon the
intrinsic value method equalled $290,625 and is recorded in general and
administrative expense.
F-17
<PAGE> 81
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. EQUITY TRANSACTIONS (CONTINUED):
In October 1999, the Company entered into an agreement with Charles
Kremp III which requires Kremp to exclusively promote the Company's
products to the Kremp Network, a cooperative of large retail florists
throughout the United States. In connection with the promotional
exclusivity with the Kremp Network, the Company issued to Kremp a
warrant representing the right to purchase 250,000 shares of common
stock at an exercise price of $8 per share and 20,000 shares of common
stock. The warrant vests quarterly over a three year period beginning on
October 1, 1999. The estimated fair value of the stock grant and warrant
totalled $635,270 and was recorded as a covenant not to compete and is
included in Intangible Assets (Note 6) in the accompanying consolidated
balance sheet at December 31, 1999.
Also in October 1999, the Company issued to its outside legal counsel
two warrants each representing the right to purchase 30,000 shares and
1,000 shares of common stock at $8 per share. The warrants vested
immediately and expire on October 17, 2009 and October 18, 2004,
respectively. The estimated fair value of the warrants based on a Black
Scholes option pricing model is $34,175 which was recorded as
professional fees within general and administrative expenses during the
year ended December 31, 1999.
In December 1999, the Company issued to Dole Fresh Flowers, a division
of Dole Food Company, a warrant representing the right to purchase
1,000,000 shares of common stock at $7.50 per share. The warrant vests
over a two-year period beginning January 1, 2000 with 58,333 shares
vesting monthly during the first year (700,000 total shares) and 25,000
vesting monthly during the second year (300,000 total shares). The
estimated fair value of the warrant based on a Black Scholes option
pricing model is $5,170,000 which will be amortized as sales and
marketing expense over the vesting period. No expense was recorded
during 1999 related to this warrant.
No warrants have been exercised as of December 31, 1999.
11. REDEEMABLE CONVERTIBLE PREFERRED STOCK:
In March 1999, the Company sold 4,000,000 shares of Series A convertible
preferred stock at $2.00 per share to investors for total proceeds of
$7,978,211 (net of offering costs of $21,789) and an option to purchase
an additional 250,000 shares exercisable at any time over the next 5
years.
The holders of Series A are allowed to elect one member to the board of
directors as a group and participate in the voting on all matters which
are decided by a shareholder vote. The holders of Series A are not as a
matter of right entitled to be paid or receive dividends or
distributions. Series A is convertible at any time at the holder's
option, at the then applicable conversion rate (1-1 at the date of
issuance) adjusted for certain events including the issuance of common
stock for consideration of less than the conversion price then in
effect. Series A is redeemable for cash at the holder's option beginning
April 1, 2001. Upon liquidation, holders of Series A preferred stock are
entitled to receive, out of funds then generally available, $2.00 per
share, plus any declared and unpaid dividends, thereon. In addition to
and after payment in full of all other amounts payable to the holders of
Series A, the holders of Series A will be entitled to share in remaining
available funds on an as if converted basis with the holders of common
stock. Because on the date of issuance of such shares, the estimated
fair market value of the Company's common stock exceeded the conversion
price, the Company has treated as a preferred stock dividend an amount
of $8,000,000 related to these transactions.
In December 1999, the Company sold 5,000,000 shares of Series B
convertible preferred stock at $4.00 per share to investors for total
proceeds of $17,254,772 (net of loan conversion of $2,366,000 and
offering costs of $379,228) which included a receivable in the amount of
$3,785,000 that was collected subsequent to December 31, 1999. In
addition, the Company issued a warrant to purchase 110,000 shares of
Series B convertible preferred stock at an exercise price of $4 per
share which expires on October 31, 2004. The Company recognized $151,800
in interest expense related to the assigned value of this warrant during
the year ended December 31, 1999.
F-18
<PAGE> 82
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED):
The holders of Series B are allowed to elect one member to the board of
directors as a group and participate in the voting on all matters which
are decided by a shareholder vote. The holders of Series B are not as a
matter of right entitled to be paid or receive dividends or
distributions. Series B is convertible at any time at the holders
option, at the then applicable conversion rate (1-1 at the date of
issuance), adjusted for certain events including the issuance of common
stock for consideration of less than the conversion price then in
effect. Series B is redeemable for cash beginning April 1, 2001. Upon
liquidation, holders of Series A and Series B preferred stock are
entitled to receive, out of funds then generally available, $4.00 per
share, plus any declared and unpaid dividends, thereon. In addition to
and after payment in full of all other amounts payable to the holders of
Series B, the holders of Series B will be entitled to share in remaining
available funds on an as if converted basis with the holders of common
stock. Because on the date of issuance of such shares, the estimated
fair market value of the Company's common stock exceeded the conversion
price, the Company has treated as a preferred stock dividend an amount
of $20,000,000 related to these transactions.
12. INCOME TAXES:
The components of the Company's net deferred tax asset and the tax
effects of the temporary differences giving rise to the
Company's deferred tax asset are as follows as of December 31, 1999 and
1998:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- ------------------
<S> <C> <C>
Noncurrent deferred tax assets:
Net operating loss $ 3,263,250 $ 113,607
Deferred compensation 911,306 615,573
Fixed assets (28,313) (1,661)
Accrued expenses 970,188 209,843
----------- ---------
Noncurrent deferred tax asset 5,116,431 937,362
Valuation allowance (5,116,431) (937,362)
----------- ---------
Net deferred tax - -
</TABLE>
Any tax benefits for the years ended December 31, 1999 and 1998 and the
period March 30, 1994 (date of inception) through December 31, 1999
computed based on statutory federal and state rates are completely
offset by valuation allowances established since realization of the
deferred tax benefits are not considered more likely than not.
As of December 31, 1999, the Company had a net operating loss of
approximately $8,587,500 available to reduce future federal income
taxes. This net operating loss carryforward will begin to expire in 2009
and is subject to limitation in any given year in the event of certain
changes in ownership.
The following table accounts for the difference between the actual tax
provision and amounts obtained by applying the statutory U.S. federal
income tax rate of 35% to the income before income taxes:
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Statutory provision $(4,423,133) $(1,256,606)
State taxes net of federal benefit (379,126) (107,709)
Nondeductible expenses 623,190 853,582
----------- -----------
(4,179,069) (510,733)
Change in valuation allowance 4,179,069 510,733
----------- -----------
$ - $ -
</TABLE>
13. RELATED-PARTY TRANSACTIONS:
In 1996, the Company entered into a five year exclusive agreement with
Hortimarc B.V., a consulting business owned by the Company's Executive
Vice President for Europe as of October 1999, for the development of
marketing and sales initiatives in the European market. The contract
provided for compensation to Hortimarc based upon time and materials
billed. This agreement was terminated upon the execution of an
employment agreement with the executive. However, the Company continues
to utilize limited services of Hortimarc for which the Company incurs
costs for time and materials. In 1999, the Company remitted $98,300 to
Hortimarc under the aforementioned agreement and for activities
conducted after the termination of such agreement.
F-19
<PAGE> 83
WORLD COMMERCE ONLINE, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. RELATED-PARTY TRANSACTIONS (CONTINUED):
In October 1999, the Company issued 25,000 shares of common stock to
the Company's Chief Financial Officer in connection with the start of
his employment with the Company.
The Company has had various transactions with the Company's founder, a
primary shareholder and a member of the board of directors. Amounts
were paid to the Company's founder for consulting fees in the amount of
$41,844 and $21,500 during 1998 and 1997, respectively. Additionally,
the Company's founder received common shares in exchange for services
valued at $56,250 (25,000 shares) in 1998 and $89,821 (290,500 shares)
since the date of inception. In 1997, the Company's founder transferred
405,000 shares of common stock valued at $225,000 to individuals in
payment of services provided to the Company. In 1998, the Company's
founder transferred 124,750 shares of common stock valued at $62,375 to
individuals in payment of services provided to the Company.
The Company also had various transactions with a primary shareholder
and member of the board of directors. Since the date of inception,
220,500 common shares have been issued to this shareholder in exchange
for services valued at $17,500.
As indicated in Note 1, the Company provided various Internet site
development services to a company affiliated through common ownership.
Amounts paid by the affiliate to the Company during 1998 and 1997 were
$180,900 and $125,640, respectively.
14. COMMITMENTS AND CONTINGENCIES:
In December 1999, the Company entered into an agreement with a Company
to integrate their Internet-based financial services product into
Floraplex for the Americas market segment providing Internet-based
sourcing of financial payment and credit services. The three year
agreement is contingent upon the identification and selection of
financial partners acceptable to the Company to facilitate the payment
system for the grower to wholesaler transactions. Upon selection of
financial partners acceptable to the Company and satisfaction of the
implementation requirements, the Company is committed to specified
transaction levels in each of the three years beginning with fiscal year
2000 at agreed-upon pricing levels. The minimum commitment relative to
fees per payment transactions processed in an annual period is
approximately $150,000 in 2000, $240,000 in 2001, and $650,000 in 2002.
The Company makes trade commitments in the course of its normal
operations and is subject to litigation incident to the conduct of its
ongoing business. In the opinion of management, there are no unusual
commitments or contingencies at December 31, 1999, that would
materially affect the financial position or operating results of the
Company.
15. BUSINESS SEGMENT INFORMATION:
As of and for the years presented, the Company has primarily operated
in one business segment, providing business-to-business electronic
commerce solutions to the fresh cut flower industry.
In August 1999, the Company acquired a subsidiary in the Netherlands.
As of December 31, 1999, and for the period from September 1, 1999
through December 31, 1999, the Company derived approximately $21,000 in
revenues and held approximately $449,000 in assets in the Netherlands.
F-20
<PAGE> 84
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Orlando, State of Florida, on the 14th day of February, 2000.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert H. Shaw
-----------------------------------------
Robert H. Shaw
Chairman of the Board and
Chief Executive Officer and President
By: /s/ Mark E. Patten
-----------------------------------------
Mark E. Patten
Executive Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
<PAGE> 85
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger between World Commerce Online, a
Nevada corporation and World Commerce Online, a Delaware
corporation, dated September 30, 1999
2.2 Acquisition Agreement dated as of September 10, 1998 between World
Commerce Online, Inc., a Nevada corporation and Sunrise Express,
Inc., a Nevada corporation
3.1 Certificate of Incorporation of World Commerce Online
3.2 Certificate of Amendment of Certificate of Incorporation amending
Certificate of Designations of Series A Preferred Stock
3.3 Bylaws
3.4 Stock Purchase Agreement for Series A Preferred Stock, dated March
30, 1999
3.5 Stock Purchase Agreement for Series B Preferred Stock, dated
November 11, 1999
3.6 Certificate of Designations of Series B Preferred Stock
3.7 Registration Rights Agreement for Series A and B Preferred Stock,
dated November 11, 1999
4.1 Form of Common Stock Certificate
4.2 Warrant Agreement in favor of Poole Carbone Capital Partners,
dated January 15, 1999
4.3 Warrant Agreement in favor of Poole Carbone Capital Partners,
dated January 15, 1999
4.4 Warrant Agreement in favor of Michael W. Poole Trust, dated
January 15, 1999
4.5 Warrant Agreement in favor of Novelle Consulting, L.L.C., dated
April 22, 1999
4.6 Warrant Agreement in favor of Kenneth B. Cobb II, dated September
20, 1999
4.7 Warrant Agreement in favor of Kenneth B. Cobb II, dated September
20, 1999
4.8 Warrant Agreement in favor of Charles Kremp, III, dated as of
October 1, 1999
4.9 Warrant Agreement in favor of Interprise Technology Partners,
L.P., dated October 15, 1999
4.10 Warrant Agreement in favor of Tucker Byrd, dated October 18, 1999
4.11 Warrant Agreement in favor of Liz Walsh, dated October 18, 1999
4.12 Warrant Agreement in favor of Nils Van Beek, dated August 26,
1999
4.13 Warrant Agreement in favor of Dole Fresh Flowers, dated December
10, 1999
10.1 1999 Stock Option Plan
10.2 Form of Executive Incentive Stock Option Agreement
10.3 Form of Executive Non-Qualified Stock Option Agreement
10.4 Form of Non-Executive Incentive Stock Option Agreement
10.5 Form of Non-Executive Non-Qualified Stock Option Agreement
10.6 Form of Indemnification Agreement for officers and directors
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- -------- ------------------------------------------------------------------
<S> <C>
10.7 Corporate Headquarters Lease Agreement, dated February 15, 1999
10.8 Consulting Agreement with AnswerThink, Inc., dated August 11,
1999
10.9 Stock Purchase Agreement by and among World Commerce Online, Fresh
Products Network, Omniflora International Ltd., Jobo Holding B.V.
and Nils Van Beek, dated August 26, 1999
10.10 Consulting Agreement with Jobo Holding B.V., dated August 26,
1999
10.11 1st Amendment to Corporate Headquarter Lease Agreement, dated
September 7, 1999
10.12 Consulting Agreement with Charles Kremp, III, dated as of October
1, 1999
10.13 Demonstration License Agreement with AnswerThink, Inc., dated
October 4, 1999
10.14 Web Site Development Agreement with Snickleways Interactive, dated
October 14, 1999
10.15 Employment Agreement with Robert H. Shaw, dated as of October 18,
1999
10.16 Employment Agreement with Mark E. Patten, dated as of October 18,
1999
10.17 Employment Agreement with J. Keith Money, dated as of October 18,
1999
10.18 Employment Agreement with Henry R. Winogrond, dated as of October
18, 1999
10.19 Employment Agreement with John R. Daniel II, dated as of October
18, 1999
10.20 Employment Agreement with Eugenio M. Valdes, dated as of October
18, 1999
10.21 Employment Agreement with Jacobus N. Kras, dated as of October 18,
1999
10.22 Floraplex User Agreement with Dole Fresh Flowers, dated December
10, 1999
10.23 Master Outsourced Services Agreement with eCredit.com, Inc., dated
December 30, 1999
21.1 Subsidiaries
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of the 30th day of September, 1999, by and between WORLD
COMMERCE ONLINE, INC., a Nevada corporation ("WCO-Nevada"), and WORLD COMMERCE
ONLINE, INC., a Delaware corporation ("WCO-Delaware" or the "Surviving
Corporation" and collectively with WCO-Nevada, the "Corporations"), with
WCO-Nevada merging with and into WCO-Delaware, such that the separate existence
of WCO-Nevada shall cease and WCO-Delaware shall continue as the surviving
corporation (the "Merger").
R E C I T A L S:
WHEREAS, the Boards of Directors and the stockholders of the
Corporations deem it advisable and in the best interests of the Corporations and
stockholders to merge the Corporations; and
WHEREAS, it is the intention of the parties hereto that the Merger
shall constitute a tax-free reorganization, as defined in Section 368 of the
Internal Revenue Code of 1986, as amended, and that this Agreement and Plan of
Merger shall also constitute a Plan of Reorganization.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly entered into by WCO-Nevada
and approved by a resolution adopted by its Board of Directors on September 30,
1999, and being duly entered into by WCO-Delaware and approved by a resolution
adopted by its Board of Directors as of September 30, 1999, this Agreement and
Plan of Merger and the terms and conditions thereof and the mode of carrying the
same into effect, are hereby determined and agreed upon as hereinafter set
forth.
ARTICLE I
1.1 The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the relevant provisions of the Nevada Revised Statutes
("NRS"), and the General Corporation Law of the State of Delaware ("DGCL"),
WCO-Nevada shall be merged with and into WCO-Delaware. Following the Merger,
WCO-Delaware shall continue as the surviving corporation and shall continue its
existence under the laws of the State of Delaware, and the separate corporate
existence of WCO-Nevada shall cease.
1.2 Effective Date and Effective Time. The Merger shall be consummated
by filing with the Secretary of State of the State of Delaware a Certificate of
Merger in accordance with the provisions of the DGCL and Articles of Merger with
the Secretary of State of the State of Nevada in accordance with the provisions
of the NRS and the conversion of the shares of stock of WCO-Nevada into shares
of stock of the Surviving Corporation as contemplated by Section 5.1. The Merger
shall have the effects set forth in the NRS and DGCL. The Merger shall be
effective immediately upon filing the Certificate of Merger with the Secretary
of State of the State of Delaware (the date and time of filing being referenced
to herein as the "Effective Date" and the "Effective Time," respectively).
<PAGE> 2
ARTICLE II
2.1 Effect of the Merger. At the Effective Time and without any further
action on the part of the Surviving Corporation, the Surviving Corporation shall
thereupon and thereafter possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, of each of the
Corporations, and be subject to all the restrictions, disabilities and duties of
each of the Corporations so merged; and all of the rights, privileges, powers
and franchises of each of the Corporations, and all property, real, personal and
mixed, and all debts due to either of the Corporations on whatever account,
shall be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises and all and every other interest shall be
thereafter the property of the Surviving Corporation as they were of the
Corporations; and the title to any real estate, vested by deed or otherwise,
under the laws of the State of Nevada or the State of Delaware or otherwise, in
either of the Corporations, shall not revert or in any way be impaired by reason
of the Merger; provided, that all debts, liabilities and duties of the
Corporations, and all rights of creditors and all liens upon any property of
either of the Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts,
liabilities and duties had been incurred or contracted by it. Specifically,
without limiting the foregoing, at the Effective Time and without any further
action on the part of the Surviving Corporation, the Surviving Corporation shall
thereupon and thereafter possess all the rights, privileges and powers, and be
subject to all the restrictions, disabilities and duties of WCO-Nevada relating
to, and pursuant to the terms of, that certain Stock Purchase Agreement by and
between WCO-Nevada and Interprise Technology Partners, L.P. dated March 30, 1999
(the "Interprise SPA"), and all agreements related thereto, including but not
limited to the Registration Rights Agreement by and between WCO-Nevada,
Interprise Technology Partners, L.P., and the other persons listed therein dated
March 30, 1999.
2.2 Stock Options. At the Effective Time, WCO-Nevada's obligations with
respect to each option ("Option") to purchase shares of common stock of
WCO-Nevada ("WCO-Nevada Common Stock") issued pursuant to WCO-Nevada's 1999
Stock Option Plan (the "Option Plan") that is then issued and outstanding,
whether vested or unvested, shall be assumed by WCO-Delaware in accordance with
the terms of the Option Plan and the stock option agreement by which such Option
is evidenced. All rights with respect to WCO-Nevada Common Stock under
outstanding Options shall thereupon be automatically converted into rights with
respect to shares of common stock of WCO-Delaware ("WCO-Delaware Common Stock").
Accordingly, from and after the Effective Time: (i) each Option assumed by
WCO-Delaware may be exercised solely for shares of WCO-Delaware Common Stock;
(ii) the number of shares of WCO-Delaware Common Stock subject to each such
assumed Option shall be equal to the number of shares of common stock that were
subject to such Option immediately prior to the Effective Time; (iii) the per
share exercise price for the shares of WCO-Delaware Common Stock issuable upon
the exercise of each such assumed Option shall be equal to the exercise price
per share of WCO-Nevada Common Stock at which such Option was exercisable
immediately prior to the Effective Time; and (iv) the provisions of each such
Option shall otherwise remain unchanged.
2.3 Warrants. At the Effective Time, WCO-Nevada's obligations with
respect to each warrant to purchase WCO-Nevada Common Stock ("Warrant") that is
then issued and outstanding, whether vested or unvested, shall be assumed by
WCO-Delaware in accordance with the terms of the Warrant. All rights with
respect to WCO-Nevada Common Stock under outstanding Warrants shall
2
<PAGE> 3
thereupon be automatically converted into rights with respect to shares of
WCO-Delaware Common Stock. Accordingly, from and after the Effective Time: (i)
each Warrant assumed by WCO-Delaware may be exercised solely for shares of
WCO-Delaware Common Stock; (ii) the number of shares of WCO-Delaware Common
Stock subject to each such assumed Warrant shall be equal to the number of
shares of common stock that were subject to such Warrant immediately prior to
the Effective Time; (iii) the per share exercise price for the shares of
WCO-Delaware Common Stock issuable upon the exercise of each such assumed
Warrant shall be equal to the exercise price per share of WCO-Nevada Common
Stock at which such Warrant was exercisable immediately prior to the Effective
Time; and (iv) the provisions of each such Warrant shall otherwise remain
unchanged.
ARTICLE III
3.1 Articles of Incorporation; Bylaws. The Certificate of
Incorporation, including the Certificate of Designation, in the form attached
hereto as Exhibit "A" and by-laws of WCO-Delaware, shall be in effect
immediately prior to the Effective Time, and shall be the Certificate of
Incorporation and by-laws of the Surviving Corporation until thereafter amended
as provided by law, the Interprise SPA and the Surviving Corporation's
Certificate of Incorporation and by-laws.
ARTICLE IV
4.1 Directors. The directors of WCO-Nevada immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected and qualified in the manner provided in the Certificate of Incorporation
and by-laws of the Surviving Corporation, or as otherwise provided by law.
4.2 Officers. The officers of WCO-Nevada immediately prior to the
Effective Time shall be the officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed in the manner provided in the by-laws of the Surviving
Corporation or as otherwise provided by law.
ARTICLE V
5.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any further action on the part of WCO-Delaware, WCO-Nevada,
or the shareholders of WCO-Nevada, the outstanding shares of WCO-Nevada Common
Stock shall be converted into shares of WCO-Delaware Common Stock, and the
outstanding shares of Class A convertible preferred stock of WCO-Nevada (the
"WCO-Nevada Preferred Stock") shall be converted into shares of Series A
convertible preferred stock of WCO-Delaware ("WCO-Delaware Preferred Stock") in
the manner described in this Article V.
5.2 Effect of Share Conversion. At the effective Time, all shares of
WCO-Nevada Common Stock and WCO-Nevada Preferred Stock converted pursuant to
this Article V shall cease to be outstanding and shall automatically be
cancelled and retired, and shall cease to exist, and each such certificate (a
"Certificate") previously evidencing WCO-Nevada Common Stock and WCO-Nevada
Preferred Stock, respectively, outstanding immediately prior to the Effective
Time shall thereafter represent the right to receive a certificate evidencing
shares of WCO-Delaware Common Stock and WCO-Delaware Preferred Stock
respectively, into which such WCO-Nevada Common
3
<PAGE> 4
Stock and WCO-Nevada Preferred Stock were converted in the Merger pursuant to
this Article V and, if applicable, the right to receive cash pursuant to Section
5.4.
5.3 Surrender of Certificates. After the Effective Time, each holder of
a Certificate immediately prior to the Effective Time shall surrender same to
the Surviving Corporation and shall receive in exchange therefore a new
certificate, representing the appropriate number of shares of common stock and
preferred stock respectively in the Surviving Corporation. Until so surrendered,
each Certificate shall, by virtue of the Merger, be deemed for all purposes to
evidence ownership of the appropriate number of shares of common stock and
preferred stock respectively of the Surviving Corporation.
5.4 Dissenter's Rights. Only stockholders who properly exercise
dissenter's rights, if any, in accordance with the provisions of the NRS, shall
be entitled to exercise such dissenter's rights in connection with the Merger.
ARTICLE VI
6.1 Book Value of Assets. The assets and liabilities of WCO-Nevada
shall be recorded upon the books of the Surviving Corporation at the amounts at
which said assets and liabilities are recorded upon the books of WCO-Nevada
immediately prior to the Effective Time.
ARTICLE VII
7.1 Termination. This Agreement may be terminated and abandoned by the
mutual consent of the Boards of Directors of the Corporations at any time before
the Effective Date, whether before or after approval of this Agreement and Plan
of Merger by the stockholders of WCO-Nevada.
ARTICLE VIII
8.1 Stockholder Approval. The obligations of each party hereto to
perform this agreement and to consummate the transaction contemplated hereby,
shall be subject to the approval and adoption by the stockholders of WCO-Nevada
holding at least a majority of the outstanding shares voting and written
approval of Interprise Technology Partners, L.P. pursuant to the Interprise SPA.
There are no stockholders of WCO-Delaware. Therefore, approval of this Agreement
by the stockholders of WCO-Delaware is not required pursuant to Section 251 (f)
of the DGCL.
8.2 Authorization. The Boards of Directors and the proper officers of
the Corporations are hereby authorized, empowered, and directed to do any and
all acts and things, and to make, execute, deliver, file, and/or record any and
all instruments, papers, and documents which shall be or become necessary,
proper, or convenient to carry out or put into effect any of the provisions of
this Agreement and Plan of Merger or of the merger herein provided for.
ARTICLE IX
9.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
conflicts of law rules thereof.
4
<PAGE> 5
9.2 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
9.3 Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be contrary to law, then the remaining provisions
of this Agreement, as applicable, if capable of substantial performance, shall
remain in full force and effect.
9.4 Third Party Beneficiaries. Interprise Technology Partners, L.P. is
an intended beneficiary of this Agreement. This Agreement is not intended to
confer upon any other person or entity, other than the parties hereto, any
rights or remedies.
9.5 Modification or Amendment.Subject to the applicable provisions of
the DGCL and the NRS, at any time prior to the approval of this Agreement by the
stockholders of WCO-Nevada, the parties hereto may modify or amend this
Agreement by mutual written agreement executed and delivered by duly authorized
officers or representatives of the respective parties.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Merger to be executed on its behalf and attested by its
officers thereunto duly authorized, all as of the date first above written.
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ Robert Shaw
-------------------------------
Robert Shaw, President
WORLD COMMERCE ONLINE, INC.,
a Delaware corporation
By: /s/ Robert Shaw
-------------------------------
Robert Shaw, President
5
<PAGE> 1
EXHIBIT 2.2
ACQUISITION AGREEMENT
Agreement dated as of September 10, 1998 between SUNRISE EXPRESS, INC., Inc., a
Nevada corporation ("Buyer") on behalf of its shareholders, and World Commerce
Online, Inc., a Nevada corporation ("Seller") on behalf of its shareholders.
The parties wish to provide for Seller's sale of the Shares to Buyer and Buyer's
purchase of the Shares from Seller on the terms and conditions of this
Agreement.
The parties agree as follows:
1. The Acquisition.
1.1 Purchase and Sale Subject to the terms and conditions
of this Agreement, at the Closing to be held as
provided in Section 2, Seller shall sell the Shares
to Buyer, and Buyer shall purchase the Shares from
Seller, free and clear of all Encumbrances. Buyer
shall change its name to WCO Holdings, Inc.
1.2 Purchase Price. Purchaser will exchange 9,000,000
shares of its restricted common stock for each share
representing all of the outstanding capital stock or
ownership interest of World Commerce Online
Development, Inc. currently held by World Commerce
Online, Inc.. The shares to be delivered by purchase
shall be delivered directly to the holders of the
World Commerce Online, Inc. Stock and not to the
treasury of World Commerce Online, Inc.
1.3 It is anticipated that this transaction is a non
taxable share exchange under Rule 368 of the Internal
Revenue Code.
2. The Closing.
2.1 Place and Time. The closing of the sale and purchase
of the Shares (the "Closing") shall take place at the
offices of Shawn Hackman, Esq., 1600 E. Desert Inn
Rd. #102, Las Vegas, NV 89109 no later than the close
of business (Las Vegas time) on 9/10/98, or at such
other place, date and time as the parties may agree
in writing.
2.2 Deliveries by Seller. At the Closing, Seller shall
deliver the following to Buyer:
(a) Certification representing the Shares, duly
endorsed for transfer to Buyer and
accompanied by any applicable stock transfer
tax stamps; Seller shall cause SUNRISE
EXPRESS, INC., Inc. to change those
certificates for, and to deliver to Buyer at
the Closing, a certificate representing the
Shares registered in the name of Buyer
(without any legend or other reference to
any Encumbrance).
(b) The documents contemplated by Section 3.
<PAGE> 2
(c) All other documents, instruments and
writings required by this Agreement to be
delivered by Seller at the Closing and any
other documents or records relating to World
Commerce Online, Inc.'s business reasonably
requested by Buyer in connection with this
Agreement.
2.3 Deliveries by Buyer. At the Closing, Buyer shall
deliver the following to Seller:
(a) The shares as contemplated by section 1.
(b) The documents contemplated by Section 4.
(c) All other documents, instruments and
writings required by this Agreement to be
delivered by Buyer at the Closing.
(d) A legal opinion as to transaction validity
and as to Buyer representations.
3. Conditions to Buyer's Obligations.
The obligations of Buyer to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by Buyer:
3.1 Representations, Warranties and Agreements.
(a) The representations and warranties of Seller
set forth in this Agreement shall be true
and complete in all material respects as of
the Closing Date as though made at such
time, (b) Seller shall have performed and
complied in all material respects with the
agreements contained in this Agreement
required to be performed and complied with
by it at or prior to the Closing and (c)
Buyer shall have received a certificate to
that effect signed by an authorized
representative of Seller.
3.2 Resignations of Directors. All directors of SUNRISE
EXPRESS, INC., Inc. and its Subsidiaries whose
resignations shall have been requested by Buyer not
less than ten Business Days before the Closing Date
shall have submitted their resignations or been
reserved effective as of the Closing Date.
4. Conditions to Seller's Obligations
The obligations of Seller to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by Seller.
4.1 Representations, Warranties and Agreements.
(a) The representations and warranties of Buyer
set forth in this Agreement shall be true
and complete in all material respects as of
the Closing Date as though made at such
time, (b) Buyer shall have performed and
complied in all material respects with the
agreements contained in this Agreement
required to be performed and complied with
by it prior to or
-2-
<PAGE> 3
at the Closing and (c) Seller shall have
received a certificate to that effect signed
by an officer of Buyer.
5. Representations and Warranties of Seller.
Seller represents and warrants to Buyer that, to the Knowledge of Seller (which
limitation shall not apply to Section 5.3), and except as set forth in the
Disclosure Letter:
5.1 Organization of Seller; Authorization Seller is a
corporation duly organized, validly existing and in
good standing under the laws of Nevada with full
corporate power and authority to execute and deliver
this Agreement and to perform its obligations
hereunder. The execution, delivery and performance
of this Agreement have been duly authorized by all
necessary corporate action of Seller and this
Agreement constitutes a valid and binding obligation
of Seller, enforceable against it in accordance with
its terms.
5.2 Conflict as to Seller: Neither the execution and
delivery of this Agreement nor the performance of
Buyer's obligations hereunder will (a) violate any
provision of the certificate of incorporation or
by-laws of Seller or (b) violate any statute or law
or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to
Seller.
5.3 Ownership of Shares. The delivery of certificates to
Buyer and the payment to Seller will result in
Buyer's immediate acquisition of record and
beneficial ownership of the Shares, free and clear of
all Encumbrances. There are no outstanding options,
rights, conversion rights, agreements or commitments
of any kind relating to the issuance, sale or
transfer of any Equity Securities or other securities
of World Commerce Online, Inc.
5.4 Title to Properties: Either World Commerce Online,
Inc. or one of its Subsidiaries owns all the material
properties and assets that they purport to own (real,
personal and nixed, tangible and intangible),
including without limitation, all the material
properties and assets reflected in the Balance Sheet
(except for property sold since the date of the
Balance Sheet in the ordinary course of business or
leased under capitalized leases), and all the
material properties and assets purchased or otherwise
acquired by World Commerce Online, Inc. or any of its
Subsidiaries since the date of the Balance Sheet.
5.5 Buildings, Plants and Equipment. The buildings,
plants, structures and material items of equipment
and other personal property owned or leased by World
Commerce Online, Inc. or its Subsidiaries are, in all
respects material to the business or financial
condition of World Commerce Online, Inc. and its
Subsidiaries, taken as a whole, in good operating
condition and repair (ordinary wear and tear
excepted) and are adequate in all such respects for
the purposes for which they are being used.
5.6 Litigation. There is no action, suit, inquiry,
proceeding or investigation by or before any court or
Governmental Body pending or threatened in writing
against or involving World Commerce Online, Inc. or
any of its Subsidiaries which is
-3-
<PAGE> 4
likely to have a material adverse effect on the
business or financial condition of SUNRISE EXPRESS,
INC., Inc. and its Subsidiaries, taken as whole, or
which would require a payment by SUNRISE EXPRESS,
INC., Inc. or its subsidiaries in excess of $2000 in
the aggregate or which questions or challenges the
validity of this Agreement. Neither World Commerce
Online, Inc. nor any of its Subsidiaries is subject
to any judgment, order or decree that is likely to
have a material adverse effect on the business or
financial condition of SUNRISE EXPRESS, INC., Inc.
and its Subsidiaries, taken as a whole, or which
would require a payment by SUNRISE EXPRESS, INC.,
Inc. or its subsidiaries in excess of $2000 in the
aggregate.
5.7 Absence of Certain Changes. Since the date of the
Balance Sheet, neither World Commerce Online, Inc.
nor any of its Subsidiaries has:
(a) suffered the damage or destruction of any of
its properties or assets (whether or not
covered by insurance) which is materially
adverse to the business or financial
condition of World Commerce Online, Inc. and
its Subsidiaries, taken as a whole, or made
any disposition of any of its material
properties or assets other than in the
ordinary course of business;
(b) made any change or amendment in its
certificate of incorporation or by-laws, or
other governing instruments;
(c) issued or sold any Equity Securities or
other securities, acquired, directly or
indirectly, by redemption or otherwise, any
such Equity Securities, reclassified,
split-up or otherwise changed any such
Equity Security, or granted or entered into
any options, warrants, calls or commitments
of any kind with respect thereto;
(d) paid, discharged or satisfied any material
claim, liability or obligation (absolute,
accrued, contingent or otherwise), other
than in the ordinary course of business;
(e) prepaid any material obligation having a
maturity of more than 90 days from the date
such obligation was issued or incurred;
(f) cancelled any material debts or waived any
material claims or rights, except in the
ordinary course of business;
(g) made any capital expenditures or additions
to property, plans or equipment or acquired
any other property or assets (other than raw
materials and supplies) at a cost in excess
of $2000 in the aggregate;
(h) written off or been required to write off
any notes or accounts receivable in an
aggregate amount in excess of $2000;
5.8 No Material Adverse Change. Since the date of the
Balance Sheet, there has not been any material
adverse change in the business or financial condition
of World
-4-
<PAGE> 5
Commerce Online, Inc. and its Subsidiaries taken as a
whole, other than changes resulting from economic
conditions prevailing in the United States.
5.9 Brokers or Finders. Seller has not employed any
broker or finder or incurred any liability for any
brokerage or broker's fees or commissions or similar
payments in connection with the sale of the Shares to
Buyer.
5.10 Transactions with Directors and Officers. World
Commerce Online, Inc. and its Subsidiaries do not
engage in business with any Person (other than
Seller) in which any of World Commerce Online, Inc.'s
directors or officers has a material equity interest.
No director or officer of World Commerce Online, Inc.
owns any property, or right which is material to the
business of World Commerce Online, Inc. and its
Subsidiaries, taken as a whole.
6. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller as follows:
6.1 Organization of Buyer; Authorization. Buyer is a
corporation duly organized, validly existing and in
good standing under the laws of Nevada with full
corporate power and authority to execute and deliver
this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all
necessary corporate action of Buyer and this
Agreement constitutes a valid and binding obligation
of Buyer, enforceable against it in accordance with
its terms.
6.2 Brokers or Finders. Buyer has not employed any broker
or finder or incurred any liability for any brokerage
or finder's fees or commissions or similar payments
in connection with any of the transactions
contemplated hereby.
6.3 Purchase for Investment. Buyer is purchasing the
shares solely for its own account for the purpose of
investment and not with a view to, or for sale in
connection with any distribution of any portion
thereof in violation of any applicable securities
law.
6.4 Conflict as to Buyer. Neither the execution and
delivery of this Agreement nor the performance of
Buyer's obligations hereunder will (a) violate any
provision of the certificate of incorporation or
by-laws of Buyer or (b) violate any statute or law or
any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to
Buyer.
6.5 Buyer is a publicly traded company which trades on
the OTC:BB under the ticker symbol SUBX. Buyer has
properly filed all documentation with the SBC, NASD
or other applicable bodies necessary to become and
remain a publicly traded company.
6.6 There are no pending or threatened legal or
regulatory claim, demands or liabilities of any kind
or nature against buyers of its assets.
-5-
<PAGE> 6
6.7 Buyer has filed all federal, state and local income
or other tax returns as required by law, and has paid
all taxes which are due, and has no tax delinquencies
of any kind.
6.8 There are currently 5,000,000 shares issued and
outstanding in buyers, with 2,500,000 freely
tradable. The shares, when issued were properly
distributed under applicable securities laws, and
Buyers has taken no action to cause said stock to
loose its free trading status. There are no warrants,
option agreements or pending subscription agreements
whereby Buyer is obligated to issue any additional
stock to any person. Buyer will, at closing, cause to
be cancelled all certificates representing the
current insider stock (2,500,000 shares) or
transferred.
6.9 Upon on closing, seller's shareholders will receive a
controlling interest in and complete management
control over Buyer by virtue of their stock
ownership, and there are no shareholder rights or
agreements, or other legal impediments to the
transfer of management control of Buyers.
7. Access and Reporting; Filings With Governmental Authorities.
7.1 Access Between the date of this Agreement and the
Closing Date, Seller shall, and shall cause World
Commerce Online, Inc. to, (a) give Buyer and its
authorized representative reasonable access to all
plants, offices, warehouses and other facilities and
properties of World Commerce Online, Inc. and its
Subsidiaries and to the books and records of World
Commerce Online, Inc. and its Subsidiaries, (b)
permit Buyer to make inspections thereof, and (c)
cause its officers and its advisors to furnish Buyer
with such financial and operating data and other
information with respect to the business and
properties of World Commerce Online, Inc. and its
Subsidiaries and to discuss with Buyer and its
authorized representatives the affairs of World
Commerce Online, Inc. and its Subsidiaries, all as
Buyer may from time to time reasonably request.
7.2 Exclusivity. From the date hereof until the earlier
of the Closing or the termination of this Agreement,
Seller shall not solicit or negotiate or enter into
any agreement with any other Person with respect to
or in furtherance of any proposal for a merger or
business combination involving, or acquisition of any
interest in, or (except in the ordinary course of
business) sale of assets by, World Commerce Online,
Inc., except for the acquisition of the Shares by
Buyer.
7.3 Publicity. Between the date of this Agreement and the
Closing Date, Seller and Buyer shall, and Seller and
Buyer shall cause SUNRISE EXPRESS, INC., Inc. to,
discuss and coordinate with respect to any public
filing or announcement or any internal or private
announcement (including any general announcement to
employees) concerning the contemplated transaction.
7.4 Confidentiality. Prior to the Closing Date (or at any
time if the Closing does not occur) Buyer shall keep
confidential and not disclose to any Person (other
than its employees, attorneys, accountants and
advisors) or use (except in connection with the
transactions contemplated hereby) all nonpublic
information obtained
-6-
<PAGE> 7
by Buyer pursuant to Section 7.1. Following the
Closing, Seller shall keep confidential and not
disclose to any Person (other than its employees,
attorneys, accountants and advisors) or use (except
connection with preparing Tax Returns and conducting
proceeds relating to Taxes) any nonpublic information
relating to SUNRISE EXPRESS, INC., Inc. and its
Subsidiaries. This Section 7.7 shall not be violated
by disclosure pursuant to court order or as otherwise
required by law, on condition that notice of the
requirement for such disclosure is given the other
party prior to making any disclosure and the party
subject to such requirement cooperates as the other
may reasonably request in resisting it. If the
Closing does not occur, Buyer shall return to Seller,
or destroy, all information it shall have received
from Seller or World Commerce Online, Inc. in
connection with this Agreement and the transactions
contemplated hereby, together with any copies or
summaries thereof or extracts therefrom. Seller and
Buyer shall use their best efforts to cause their
respective representatives, employees, attorneys,
accountants and advisors to whom information is
disclosed pursuant to Sections 7.1 and 7.6 to comply
with the provisions of this Section 7.7.
8. Conduct of World Commerce Online, Inc.'s Business Prior to the
Closing.
8.1 Operation in Ordinary Course. Between the date of
this Agreement and the Closing Date, Seller shall
cause World Commerce Online, Inc. and its
Subsidiaries to conduct their businesses in all
material respects in the ordinary course.
8.2 Business Organization. Between the date of this
Agreement and the Closing Date, Seller shall use its
reasonable efforts, and shall cause World Commerce
Online, Inc. and each of its Subsidiaries to use its
respective reasonable efforts, to (a) preserve
substantially intact the business organization of
World Commerce Online, Inc. and each of its
Subsidiaries and keep available the services of the
present officers and employees of World Commerce
Online, Inc. and each of its Subsidiaries, and (b)
preserve in all material respects the present
business relationships and good will of World
Commerce Online, Inc. and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this
Agreement and the Closing Date, neither Buyer or
Seller shall not cause or permit any amendment of the
certificate of incorporation or by-laws (or other
governing instrument) of World Commerce Online, Inc.
or any of its Subsidiaries, and shall cause World
Commerce Online, Inc. and each of its Subsidiaries
not to:
(a) issue, sell or otherwise dispose of any of
its Equity Securities, or create, sell or
otherwise dispose of any options, rights,
conversion rights or other agreements or
commitments of any kind relating to the
issuance, sale or disposition of any of its
Equity Securities;
(b) sell or otherwise dispose of any Equity
Securities of World Commerce Online, Inc. or
any of its Subsidiaries, or create or suffer
to be created any Encumbrances thereon, or
create, sell or otherwise dispose of any
options, rights, conversion rights or other
agreements or commitments of
-7-
<PAGE> 8
any kind relating to the sale or disposition
of any Equity Securities of World Commerce
Online, Inc. or any of its Subsidiaries;
(c) reclassify, split up or otherwise change any
of its Equity Securities;
(d) be party to any merger, consolidation or
other business combination;
(e) sell, lease, license or otherwise dispose of
any of its properties or assets (including,
but not limited to rights with respect to
patents and registered trademarks and
copyrights or other proprietary rights), in
an amount which is material to the business
or financial condition of World Commerce
Online, Inc. and its Subsidiaries, taken as
a whole, except in the ordinary course of
business.
8. Survival of Representations and Warranties; Indemnification.
8.1 Survival. No representation or warranty contained in
this Agreement or in any certificate or document
delivered pursuant hereto shall survive the Closing,
except for those contained in Sections 5.1, 5.2, 5.3
(only as to Seller), 5.10, 6.1, 6.2, 6.3, 6.4 (the
"Surviving Representations and Warranties").
8.2 Indemnification by Seller. Seller shall indemnify and
hold harmless Buyer and SUNRISE EXPRESS, INC., Inc.,
and shall reimburse Buyer and SUNRISE EXPRESS, INC.,
Inc. for, any loss, liability, damage or expense
(including reasonable attorneys fees) (collectively,
"Damages") arising from or in connection with (a) any
inaccuracy in any of the Surviving Representations
and Warranties of Seller in this Agreement or (b) any
failure by Seller to perform or comply with any
agreement in this Agreement.
8.3 Indemnification by Buyer. Buyer shall indemnify and
hold harmless Seller, and shall reimburse Seller for,
any Damages arising from or in connection: with (a)
any inaccuracy in any of the Surviving
Representations and Warranties of Buyer in this
Agreement, (b) any failure by Buyer to perform or
comply with any agreement in this Agreement, except
that after the Closing no claim shall be made with
respect to the failure to perform or comply with any
agreement required to have been performed or complied
with prior to the Closing Date, (c) any claims
arising from the conduct of the business of World
Commerce Online, Inc; and the Subsidiaries after the
Closing and (d) any payments made by Seller after the
Closing pursuant to any guaranty by Seller of any
obligation of SUNRISE EXPRESS, INC., Inc. or any of
its Subsidiaries (other than as contemplated by
Section 2.4). Buyer shall use its best efforts to
obtain Seller's release from any such guaranties.
-8-
<PAGE> 9
9. Termination.
9.1 Termination. This Agreement may be terminated before
the Closing occurs only as follows:
(a) By written agreement of Seller and Buyer at
any time.
(b) By Seller, by notice to Buyer at any time,
if one or more of the conditions specified
in Section 4 is not satisfied at the time at
which the Closing (as it may be deferred
pursuant to Section 2.1) would otherwise
occur or if satisfaction of such a condition
is or becomes impossible.
(c) By Buyer, by notice to Seller at any time,
if one or more of the conditions specified
in Section 3 is not satisfied at the time at
which the Closing (as it may be deferred
pursuant to Section 2.1), would otherwise
occur or if satisfaction of such a condition
is or becomes impossible.
(d) By Buyer or Seller, by notice to the other
at any time after 12-17-98.
9.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 12.1, this Agreement
shall terminate without any liability or further
obligation of any party to another.
10. Notices.
All notices, consents, assignments and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a)
delivered by hand, (b) sent by telex or telecopier (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) received by the delivery service (receipt requested), in each case to the
appropriate addresses, telex numbers and telecopier numbers set forth below (or
to such other addresses, telex numbers and telecopier numbers as a party may
designate as to itself by notice to the other parties).
<TABLE>
<S> <C>
(a) If to Buyer: (b) If to Seller:
c/o Shawn F. Hackman, Esq. World Commerce Online, Inc.
1600 E. Desert Inn Rd. #206-A 9675 Tradeport Drive
Las Vegas, NV 89109 Orlando, Florida 32827
Telecopier No.: 702-732-2253 Telecopier No.: (407) 240-9228
Attention: Shawn F. Hackman Attention: William Mobley
</TABLE>
11. Miscellaneous.
11.1 Expenses. Each party shall bear its own expenses
incident to the preparation, negotiation, execution
and delivery of this Agreement and the performance of
its obligations hereunder.
11.2 Captions. The captions in this Agreement are for
convenience of reference only and shall not be given
any effect in the interpretation of this agreement.
-9-
<PAGE> 10
11.3 No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver or deprive
that party of the right thereafter to insist upon
strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing.
11.4 Exclusive Agreement; Amendment. This Agreement
supersedes all prior agreements among the parties
with respect to its subject matter and is intended
(with the documents referred to herein) as a complete
and exclusive statement of the terms of the agreement
among the parties with respect thereto and cannot be
changed or terminated orally.
11.5 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be
considered an original, but all of which together
shall constitute the same instrument.
11.6 Governing Law. This Agreement and (unless otherwise
provided) all amendments hereof and waivers and
consents hereunder shall be governed by the internal
law of the State of Nevada, without regard to the
conflicts of law principles thereof.
11.7 Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and
their respective successors and assigns, provided
that neither party may assign its rights hereunder
without the consent of the other except that Buyer
may assign its rights (but not its obligations) under
this Agreement to its wholly-owned Subsidiary without
the consent of Seller, provided that, after the
Closing, no consent of Seller shall be needed in
connection with any merger or consolidation of Buyer
with or into another entity.
SUNRISE EXPRESS, INC., Inc.
By: /s/ Lucia G. Triana
-------------------------------
Lucia G. Triana, President
World Commerce Online, Inc.
By: /s/ William Mobley
-------------------------------
William Mobley, President
-10-
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
WORLD COMMERCE ONLINE, INC.
FIRST: The name of the corporation is World Commerce Online, Inc. (the
"Corporation").
SECOND: The address of its registered office in the State of Delaware
is 1013 Centre Road, in the City of Wilmington, County of New Castle, Delaware
19805. The name of the registered agent at such address is Corporation Service
Company.
THIRD: The nature of the business or purpose to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 100,000,000 shares, consisting
of:
(a) 90,000,000 shares of Common Stock, par value $0.001
per share;
(b) 10,000,000 shares of Preferred Stock, par value
$0.001 per share.
The board of directors is authorized, subject to limitations prescribed
by law, to provide for the issuance of the shares of Preferred Stock in series,
and by filing a certificate pursuant to the applicable law of the State of
Delaware, to establish form time to time the number of shares to be included in
each such series, and to fix the designation, voting, powers, preferences and
rights of the shares or each such series and any qualifications, limitations or
restrictions thereof. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock, without a vote of the holders of the
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the certificate or certificates establishing any series of
Preferred Stock.
FIFTH: The business and affairs of the corporation shall be managed by
or under the direction of the board of directors, and the directors need not be
elected by written ballot unless required by the bylaws of the corporation.
SIXTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the board of directors is expressly
authorized to make, alter or repeal the bylaws of the Corporation.
SEVENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by the laws of the State of Delaware. All
rights herein conferred upon stockholders are granted subject to this
reservation.
<PAGE> 2
EIGHTH: A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability: (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Delaware General Corporation
Law; or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after the
filing of the certificate of incorporation of which this article is a part to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
NINTH: The name and mailing address of the person who is to serve as
the sole director of the Corporation until the first annual meeting of
stockholders or until his successor is elected and qualified is
Name Mailing Address
---- ---------------
Robert Shaw 9677 Tradeport Drive
Orlando, FL 32827
TENTH: The incorporator is Robert Shaw, whose mailing address is 9677
Tradeport Drive, Orlando, FL 32827
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation under the laws of the State of Delaware, do
make, file and record this certificate of incorporation, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and, accordingly, have hereto set my hand this 30th day of September, 1999.
/s/ Robert Shaw
-------------------------------
Robert Shaw, Incorporator
2
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
WORLD COMMERCE ONLINE, INC.
IT IS HEREBY CERTIFIED THAT:
1. The name of the corporation (hereinafter called the "Corporation")
is World Commerce Online, Inc.
2. The certificate of incorporation of the Corporation is hereby
amended by deleting the current Certificate of Designations, Powers, Preferences
and Rights of Series A Preferred Stock of the Corporation and by substituting in
lieu thereof the following Certificate of Designations, Powers, Preferences and
Rights of Series A Preferred Stock of the Corporation attached hereto as Exhibit
A.
3. The amendment of the certificate of incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
By: /s/ Robert Shaw
-------------------------------
Robert Shaw, President
<PAGE> 2
----------
CERTIFICATE OF DESIGNATIONS, POWERS, PREFERENCES AND RIGHTS
OF
SERIES A PREFERRED STOCK
OF
WORLD COMMERCE ONLINE, INC.
----------
World Commerce Online, Inc., a Delaware corporation (the
"CORPORATION"), in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation by the Certificate of Incorporation (or an amendment thereto) of
the Corporation, the Board of Directors by unanimous written consent executed on
November 11, 1999, duly adopted the following resolution providing for the
issuance of a series of four million two hundred fifty thousand (4,250,000)
shares of Preferred Stock, par value $0.001 per share, each to be designated
"Series A Preferred Stock":
RESOLVED, that, pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation
shall be designated Series A Preferred Stock which shall consist of four million
two hundred fifty thousand (4,250,000) shares, par value of one-tenth of one
cent ($0.001) per share, and each share shall have the following voting powers,
dividend rights, rights of redemption, conversion features and other powers,
preferences and rights:
SECTION 1. DIVIDENDS.
1.1A. GENERAL OBLIGATION. When and as declared by the Corporation's
Board of Directors and to the extent permitted under the General Corporation Law
of the State of Delaware, the Corporation shall pay dividends in cash to the
holders of the Series A Preferred Stock (the "SERIES A PREFERRED") and the
holders of the Series B Preferred Stock (the "SERIES B PREFERRED") (the Series A
Preferred and Series B Preferred are referred to together as the "SERIES A AND B
PREFERRED") pari passu and in preference to the holders of all other class of
stock of the Company, as provided in this Section 1. The date on which the
Corporation initially issues any share of Series A Preferred shall be deemed to
be its "DATE OF ISSUANCE" regardless of the number of times transfer of such
share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
share.
1.1B. DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series A and B Preferred, such
payment shall be distributed ratably among the
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holders of the Series A and B Preferred Stock based on the dividend amount
each such holder is otherwise entitled to receive and the aggregate dividend
amount all such holders are otherwise entitled to receive.
SECTION 2. LIQUIDATION.
Upon any liquidation, dissolution or winding up of the Corporation
(whether voluntary or involuntary), each holder of Series A and B Preferred
shall be entitled to be paid, pari passu and before any distribution or payment
is made upon any Junior Securities, an amount in cash equal to the aggregate
Liquidation Value of all shares of Series A and B Preferred held by such holder
(plus all accrued and unpaid dividends thereon), and the holders of Series A and
B Preferred shall not be entitled to any further payment, except as set forth
below. If upon any such liquidation, dissolution or winding up of the
Corporation the Corporation's assets to be distributed among the holders of the
Series A and B Preferred are insufficient to permit payment to such holders of
the aggregate amount which they are entitled to be paid under this Section 2,
then the entire assets available to be distributed to the Corporation's
stockholders shall be distributed ratably among such holders based on the
Liquidation Value (plus all accrued and unpaid dividends) of the Series A and B
Preferred held by each such holder and the aggregate Liquidation Value (plus all
accrued and unpaid dividends) of the Series A and B Preferred held by all such
holders. Prior to the liquidation, dissolution or winding up of the Corporation,
the Corporation shall declare for payment all accrued and unpaid dividends with
respect to the Series A Preferred, but only to the extent of funds of the
Corporation legally available for the payment of dividends. Not less than sixty
(60) days prior to the payment date stated therein, the Corporation shall mail
written notice of any such liquidation, dissolution or winding up to each record
holder of Series A Preferred, setting forth in reasonable detail the amount of
proceeds to be paid with respect to each share of Series A Preferred and each
share of Common Stock in connection with such liquidation, dissolution or
winding up. In addition to and after payment in full of all other amounts
payable to the holders of the Series A Preferred under this Section 2, upon any
liquidation, dissolution or winding up of the Corporation (whether voluntary or
involuntary), the holders of the Series A Preferred shall be entitled to
participate on an as if converted basis with the holders of Common Stock as a
single class in the distribution of assets of the Corporation with respect to
the Common Stock.
SECTION 3. PRIORITY OF SERIES A PREFERRED ON DIVIDENDS AND REDEMPTIONS.
So long as any Series A Preferred remains outstanding, without the
prior written consent of the holders of a majority of the outstanding shares of
Series A Preferred, the Corporation shall not, nor shall it permit any
Subsidiary to, redeem, purchase or otherwise acquire directly or indirectly any
Series B Preferred or Junior Securities, nor shall the Corporation directly or
indirectly pay or declare any dividend or make any distribution upon any Series
B Preferred or Junior Securities.
SECTION 4. REDEMPTIONS.
4.1A. REDEMPTION PAYMENTS. For each share of Series A Preferred which
is to be redeemed hereunder, the Corporation shall be obligated on the
Redemption Date to pay to the holder thereof (upon surrender by such holder at
the Corporation's principal office of the certificate
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representing such share) an amount in cash equal to the Liquidation Value of
such share (plus all accrued and unpaid dividends thereon). If the funds of the
Corporation legally available for redemption of shares of Series A Preferred or
Series B Preferred on any Redemption Date are insufficient to redeem the total
number of shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of shares of
Series A and B Preferred ratably among the holders of the shares of Series A and
B Preferred to be redeemed based upon the Liquidation Value of such shares held
by each such holder (plus all accrued and unpaid dividends thereon). At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series A and B Preferred, such funds shall
immediately be used to redeem the balance of the shares of Series A and B
Preferred which the Corporation has become obligated to redeem on any Redemption
Date but which it has not redeemed. Prior to any redemption of Series A
Preferred, the Corporation shall declare for payment all accrued and unpaid
dividends with respect to the shares which are to be redeemed, but only to the
extent of funds of the Corporation legally available for the payment of
dividends.
4.1B. DETERMINATION OF THE NUMBER OF EACH HOLDER'S SHARES TO BE
REDEEMED. Except as otherwise provided herein, the number of shares of Series A
Preferred to be redeemed from each holder thereof in redemptions hereunder shall
be the number of shares determined by multiplying the total number of shares of
Series A and B Preferred to be redeemed times a fraction, the numerator of which
shall be the total number of shares of Series A and B Preferred then held by
such holder and the denominator of which shall be the total number of shares of
Series A and B Preferred then outstanding.
4.1C. DIVIDENDS AFTER REDEMPTION DATE. No share of Series A Preferred
shall be entitled to any dividends accruing after the date on which the
Liquidation Value of such share (plus all accrued and unpaid dividends thereon)
is paid to the holder of such share. On such date, all rights of the holder of
such share of Series A Preferred shall cease, and such share shall no longer be
deemed to be issued and outstanding.
4.1D. REDEEMED OR OTHERWISE ACQUIRED SHARES. Any shares of Series A
Preferred which are redeemed or otherwise acquired by the Corporation shall be
canceled and retired to authorized but unissued shares and shall not be
reissued, sold or transferred.
4.1E. PAYMENT OF ACCRUED DIVIDENDS. The Corporation may not redeem any
Series A Preferred, unless all dividends accrued on the outstanding Series A
Preferred through the date of such redemption have been declared and paid in
full.
4.1F. SPECIAL REDEMPTIONS.
(i) If a Change in Ownership has occurred or the Corporation
obtains knowledge that a Change in Ownership is proposed to occur, the
Corporation shall give prompt written notice of such Change in Ownership
describing in reasonable detail the material terms and date of consummation
thereof to each holder of Series A Preferred, but in any event such notice shall
not be given later than ten (10) days after the occurrence of such Change in
Ownership, and the Corporation shall give each holder of Series A Preferred
prompt written notice of any material
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<PAGE> 5
change in the terms or timing of such transaction. The holder or holders of a
majority of the Series A and B Preferred then outstanding may require the
Corporation to redeem all or any portion of the Series A and B Preferred owned
by such holder or holders at a price per share equal to the Liquidation Value
thereof (plus all accrued and unpaid dividends thereon) by giving written notice
to the Corporation of such election prior to the later of: (a) twenty-one (21)
days after receipt of the Corporation's notice; or (b) five (5) days prior to
the consummation of the Change in Ownership (the "EXPIRATION DATE"). The
Corporation shall give prompt written notice of any such election to all other
holders of Series A Preferred within five (5) days after the receipt thereof,
and each such holder shall have until the later of: (a) the Expiration Date; or
(b) ten (10) days after receipt of such second notice to request redemption
hereunder (by giving written notice to the Corporation) of all or any portion of
the Series A Preferred owned by such holder.
Upon receipt of such election(s), the Corporation shall be obligated to
redeem the aggregate number of shares of Series A and B Preferred specified
therein on the later of: (a) the occurrence of the Change in Ownership; or (b)
five (5) days after the Corporation's receipt of such election(s). If any
proposed Change in Ownership does not occur, all requests for redemption in
connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Series A Preferred may rescind such holder's request for redemption by giving
written notice of such rescission to the Corporation.
The term "CHANGE IN OWNERSHIP" means any sale, transfer or issuance or
series of sales, transfers and/or issuances of shares of the Corporation's
capital stock by the Corporation or any holders thereof which results in any
Person or group of Persons (as the term "group" is used under the Securities
Exchange Act of 1934), other than the holders of Common Stock as of the date of
the Purchase Agreement, owning capital stock of the Corporation possessing the
voting power (under ordinary circumstances) to elect a majority of the
Corporation's Board of Directors.
(ii) If a Fundamental Change is proposed to occur, the
Corporation shall give written notice of such Fundamental Change describing in
reasonable detail the material terms and date of consummation thereof to each
holder of Series A Preferred not more than forty-five (45) days nor less than
twenty (20) days prior to the consummation of such Fundamental Change, and the
Corporation shall give each holder of Series A Preferred prompt written notice
of any material change in the terms or timing of such transaction. The holder or
holders of a majority of the Series A and B Preferred then outstanding may
require the Corporation to redeem all or any portion of the Series A and B
Preferred owned by such holder or holders at a price per share equal to the
Liquidation Value thereof (plus all accrued and unpaid dividends thereon) by
giving written notice to the Corporation of such election prior to the later of:
(a) ten (10) days prior to the consummation of the Fundamental Change; or (b)
ten (10) days after receipt of notice from the Corporation. The Corporation
shall give prompt written notice of such election to all other holders of Series
A Preferred (but in any event within five (5) days prior to the consummation of
the Fundamental Change), and each such holder shall have until two (2) days
after the receipt of such notice to request redemption (by written notice given
to the Corporation) of all or any portion of the Series A Preferred owned by
such holder.
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Upon receipt of such election(s), the Corporation shall be obligated to
redeem the aggregate number of shares of Series A and B Preferred specified
therein upon the consummation of such Fundamental Change. If any proposed
Fundamental Change does not occur, all requests for redemption in connection
therewith shall be automatically rescinded, or if there has been a material
change in the terms or the timing of the transaction, any holder of Series A
Preferred may rescind such holder's request for redemption by delivering written
notice thereof to the Corporation prior to the consummation of the transaction.
The term "FUNDAMENTAL CHANGE" means: (a) any sale or transfer of more
than fifty percent (50%) of the assets of the Corporation and its Subsidiaries
on a consolidated basis (measured either by book value in accordance with
generally accepted accounting principles consistently applied or by fair market
value determined in the reasonable good faith judgment of the Corporation's
Board of Directors) in any transaction or series of transactions (other than
sales in the ordinary course of business); and (b) any merger or consolidation
to which the Corporation is a party, except for a merger in which the
Corporation is the surviving corporation, the terms of the Series A Preferred
and the Series B Preferred are not changed and neither the Series A Preferred
nor the Series B Preferred is exchanged for cash, securities or other property,
and after giving effect to such merger, the holders of the Corporation's
outstanding capital stock possessing a majority of the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors.
4.1G. REDEMPTIONS UPON REQUEST. At any time after April 1, 2001, the
holders of a majority of the outstanding Series A and B Preferred may request
redemption of all of their shares of Series A and B Preferred by delivering
written notice of such request to the Corporation. Within five (5) days after
receipt of such request, the Corporation shall give written notice of such
request to all other holders of Series A Preferred, and such other holders may
request redemption of their shares of Series A Preferred by delivering written
notice to the Corporation within ten (10) days after receipt of the
Corporation's notice. The Corporation shall be required to redeem all shares of
Series A and B Preferred with respect to which such redemption requests have
been made at a price per share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon) within twenty (20) days after receipt of
the initial redemption request.
SECTION 5. VOTING RIGHTS.
5.1A. ELECTION OF DIRECTORS. In the election of directors of the
Corporation, the holders of the Series A Preferred, voting separately as a
single class to the exclusion of all other classes of the Corporation's capital
stock and with each share of Series A Preferred entitled to one vote, shall be
entitled to elect one (1) director to serve on the Corporation's Board of
Directors until his successor is duly elected by the holders of the Series A
Preferred or he is removed from office by the holders of the Series A Preferred.
At such time as no shares of Series A Preferred are outstanding, any director in
office elected solely by the holders of the Series A Preferred voting separately
as a class shall remain as a member of the Board, until such time as his
successor shall be duly elected by the stockholders of the Corporation then
entitled to vote for all directors. If the holders of the Series A
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Preferred for any reason fail to elect anyone to fill any such directorship,
such position shall remain vacant until such time as the holders of the Series A
Preferred elect a director to fill such position and shall not be filled by
resolution or vote of the Corporation's Board of Directors or the Corporation's
other stockholders. In order to protect the representation on the Board of
Directors granted to the holders of the Series A Preferred, any expansion of the
number of directors constituting the Board of Directors beyond five (5) members,
shall require, in addition to any other voting requirement set forth in the
Articles of Incorporation, the vote of a majority of the Series A Preferred
issued and outstanding, voting separately as a single class to the exclusion of
all other classes of the Corporation's capital stock and with each share of
Series A Preferred entitled to one vote.
5.1B. OTHER VOTING RIGHTS. The holders of the Series A Preferred shall
be entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and except in the election of directors and as otherwise
required by applicable law, the holders of the Series A Preferred shall be
entitled to vote on all matters submitted to the stockholders for a vote
together with the holders of the Common Stock voting together as a single class
with each share of Common Stock entitled to one vote per share and each share of
Series A Preferred entitled to one vote for each share of Common Stock issuable
upon conversion of the Series A Preferred as of the record date for such vote
or, if no record date is specified, as of the date of such vote.
SECTION 6. CONVERSION.
6.1A. CONVERSION PROCEDURE.
(i) At any time and from time to time, any holder of Series A
Preferred may convert all or any portion of the Series A Preferred (including
any fraction of a share) held by such holder into a number of shares of
Conversion Stock computed by multiplying the number of shares of Series A
Preferred to be converted by $2.00 and dividing the result by the Conversion
Price then in effect.
(ii) Except as otherwise provided herein, each conversion of
Series A Preferred shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing the
Series A Preferred to be converted have been surrendered for conversion at the
principal office of the Corporation. At the time any such conversion has been
effected, the rights of the holder of the shares of Series A Preferred converted
as a holder of Series A Preferred shall cease and the Person or Persons in whose
name or names any certificate or certificates for shares of Conversion Stock are
to be issued upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Conversion Stock represented thereby.
(iii) The conversion rights of any share of Series A Preferred
subject to redemption hereunder shall terminate on the Redemption Date for such
share unless the Corporation has failed to pay to the holder thereof the
Liquidation Value of such share (plus all accrued and unpaid dividends thereon
and any premium payable with respect thereto).
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(iv) Notwithstanding any other provision hereof, if a
conversion of Series A Preferred is to be made in connection with a Public
Offering, a Change in Ownership, a Fundamental Change or other transaction
affecting the Corporation, the conversion of any shares of Series A Preferred
may, at the election of the holder thereof, be conditioned upon the consummation
of such transaction, in which case such conversion shall not be deemed to be
effective until such transaction has been consummated.
(v) As soon as possible after a conversion has been effected
(but in any event within five (5) business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such name or
names and such denomination or denominations as the converting holder has
specified;
(b) payment in an amount equal to all accrued dividends with
respect to each share of Series A Preferred converted which have not been paid
prior thereto, plus the amount payable under subparagraph (x) below with respect
to such conversion; and
(b) a certificate representing any shares of Series A
Preferred which were represented by the certificate or certificates delivered to
the Corporation in connection with such conversion but which were not converted.
(vi) If for any reason the Corporation is unable to pay any
portion of the accrued and unpaid dividends on Series A Preferred being
converted, such dividends may, at the converting holder's option, be converted
into an additional number of shares of Conversion Stock determined by dividing
the amount of the unpaid dividends to be applied for such purpose, by the
Conversion Price then in effect.
(vii) The issuance of certificates for shares of Conversion
Stock upon conversion of Series A Preferred shall be made without charge to the
holders of such Series A Preferred for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
share of Series A Preferred, the Corporation shall take all such actions as are
necessary in order to insure that the Conversion Stock issuable with respect to
such conversion shall be validly issued, fully paid and nonassessable, free and
clear of all taxes, liens, charges and encumbrances with respect to the issuance
thereof.
(viii) The Corporation shall not close its books against the
transfer of Series A Preferred or of Conversion Stock issued or issuable upon
conversion of Series A Preferred in any manner which interferes with the timely
conversion of Series A Preferred. The Corporation shall assist and cooperate
with any holder of shares of Series A Preferred required to make any
governmental filings or obtain any governmental approval prior to or in
connection with any conversion of shares of Series A Preferred hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
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(ix) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series A Preferred, such
number of shares of Conversion Stock issuable upon the conversion of all
outstanding Series A Preferred. All shares of Conversion Stock which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance). The Corporation shall not take any action which would cause the
number of authorized but unissued shares of Conversion Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon
conversion of the Series A Preferred.
(x) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be delivered upon any
conversion of the Series A Preferred, the Corporation, in lieu of delivering the
fractional share therefor, shall pay an amount to the holder thereof equal to
the Market Price of such fractional interest as of the date of conversion.
(xi) If the shares of Conversion Stock issuable by reason of
conversion of Series A Preferred are convertible into or exchangeable for any
other stock or securities of the Corporation, the Corporation shall, at the
converting holder's option, upon surrender of the shares to be converted by such
holder as provided herein together with any notice, statement or payment
required to effect such conversion or exchange of Conversion Stock, deliver to
such holder or as otherwise specified by such holder a certificate or
certificates representing the stock or securities into which the shares of
Conversion Stock issuable by reason of such conversion are so convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such holder has specified.
6.1B. CONVERSION PRICE.
(i) The initial Conversion Price shall be $2.00. In order to
prevent dilution of the conversion rights granted under this Section 6, the
Conversion Price shall be subject to adjustment from time to time pursuant to
this paragraph 6.1B.
(ii) If and whenever on or after the original date of issuance
of the Series A Preferred the Corporation issues or sells, or in accordance with
paragraph 6.1C is deemed to have issued or sold, any share of Common Stock for a
consideration per share less than the Conversion Price in effect immediately
prior to such time, then immediately upon such issue or sale or deemed issue or
sale the Conversion Price shall be reduced to the lowest net price per share at
which any such share of Common Stock has been issued or sold or is deemed to
have been issued or sold. Notwithstanding anything to the contrary contained in
paragraph 6.1C, the Conversion price shall never be increased above $2.00, as
adjusted pursuant to paragraph 6.1D.
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(iii) Notwithstanding the foregoing, there shall be no
adjustment to the Conversion Price hereunder with respect to the granting of
stock options, with an exercise price per share of not less than ninety percent
(90%) of the price per share paid for the Series A Preferred pursuant to the
Purchase Agreement (as equitably adjusted for subsequent stock splits, stock
combinations, stock dividends and recapitalizations and such number shall
include all stock options outstanding as of the date of the Purchase Agreement),
pursuant to a plan adopted by the Corporation's board of directors, to employees
or directors of, or consultants to, the Corporation and its Subsidiaries or the
exercise thereof for an aggregate of 2,277,750 shares of Common Stock (as such
number of shares is equitably adjusted for subsequent stock splits, stock
combinations, stock dividends and recapitalizations and such number shall
include all stock options outstanding as of the date of the Purchase Agreement).
6.1C. EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under paragraph 6.1B, the following
shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any
manner grants or sells any Option and the lowest price per share for which any
one share of Common Stock is issuable upon the exercise of any such Option, or
upon conversion or exchange of any Convertible Security issuable upon exercise
of any such Option, is less than the Conversion Price in effect immediately
prior to the time of the granting or sale of such Option, then such share of
Common Stock shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such Option for such
price per share. For purposes of this paragraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange
of any Convertible Security issuable upon exercise of such Option. No further
adjustment of the Conversion Price shall be made upon the actual issue of such
Common Stock or such Convertible Security upon the exercise of such Options or
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Security.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in
any manner issues or sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion or
exchange thereof is less than the Conversion Price in effect immediately prior
to the time of such issue or sale, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Corporation at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this paragraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the issuance or
sale of the Convertible Security and upon the conversion or exchange of such
Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or exchange of
any Convertible Security, and if any such issue or sale of such Convertible
Security is made upon exercise of any Options for which adjustments of the
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Conversion Price had been or are to be made pursuant to other provisions of this
Section 6, no further adjustment of the Conversion Price shall be made by reason
of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Option, the additional consideration (if any)
payable upon the issue, conversion or exchange of any Convertible Security or
the rate at which any Convertible Security is convertible into or exchangeable
for Common Stock changes at any time, the Conversion Price in effect at the time
of such change shall be adjusted immediately to the Conversion Price which would
have been in effect at such time had such Option or Convertible Security
originally provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that if such adjustment of the Conversion Price would result in
an increase in the Conversion Price then in effect, such adjustment shall not be
effective until thirty (30) days after written notice thereof has been given to
all holders of the Series A Preferred, and provided further that, if such
adjustment would result in an increase in the Conversion Price, such adjustment
shall only be effective if no shares of Common Stock had theretofore been issued
with respect to such Options or Convertible Securities. For purposes of
paragraph 6.1C, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series A Preferred are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change; provided that no such change shall at any time cause the
Conversion Price hereunder to be increased.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or termination,
never been issued; provided that if such expiration or termination would result
in an increase in the Conversion Price then in effect, such increase shall not
be effective until thirty (30) days after written notice thereof has been given
to all holders of the Series A Preferred. For purposes of paragraph 6.1C, the
expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series A Preferred shall not cause
the Conversion Price hereunder to be adjusted unless, and only to the extent
that, a change in the terms of such Option or Convertible Security caused it to
be deemed to have been issued after the date of issuance of the Series A
Preferred.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor (net of discounts,
commissions and related expenses). If any Common Stock, Option or Convertible
Security is issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the Market Price thereof as of the date of receipt.
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If any Common Stock, Option or Convertible Security is issued to the owners of
the non-surviving entity in connection with any merger in which the Corporation
is the surviving corporation, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Option or
Convertible Security, as the case may be. The fair value of any consideration
other than cash and securities shall be determined jointly by the Corporation
and the holders of a majority of the outstanding Series A Preferred. If such
parties are unable to reach agreement within a reasonable period of time, the
fair value of such consideration shall be determined by an independent appraiser
experienced in valuing such type of consideration jointly selected by the
Corporation and the holders of a majority of the outstanding Series A Preferred.
The determination of such appraiser shall be final and binding upon the parties,
and the fees and expenses of such appraiser shall be borne by the Corporation.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of $.001.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) RECORD DATE. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them: (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities; or (b) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
6.1D. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
6.1E. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "ORGANIC CHANGE". Prior to the
consummation of any Organic Change, the
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Corporation shall make appropriate provisions (in form and substance reasonably
satisfactory to the holders of a majority of the Series A Preferred then
outstanding) to insure that each of the holders of Series A Preferred shall
thereafter have the right to acquire and receive, in lieu of or in addition to
(as the case may be) the shares of Conversion Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's Series A
Preferred, such shares of stock, securities or assets as such holder would have
received in connection with such Organic Change if such holder had converted its
Series A Preferred immediately prior to such Organic Change. In each such case,
the Corporation shall also make appropriate provisions (in form and substance
reasonably satisfactory to the holders of a majority of the Series A Preferred
then outstanding) to insure that the provisions of this Section 6 and Sections 7
and 8 hereof shall thereafter be applicable to the Series A Preferred
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Conversion Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Series A Preferred, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the holders of a majority of the Series A
Preferred then outstanding), the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
6.1F. CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of this Section 6 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors shall make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of Series A
Preferred; provided that no such adjustment shall increase the Conversion Price
as otherwise determined pursuant to this Section 6 or decrease the number of
shares of Conversion Stock issuable upon conversion of each share of Series A
Preferred.
6.1G. NOTICES.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series A
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series A Preferred at least twenty (20) days prior to the date on which the
Corporation closes its books or takes a record: (a) with respect to any dividend
or distribution upon Common Stock; (b) with respect to any pro rata subscription
offer to holders of Common Stock; or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
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(iii) The Corporation shall also give written notice to the
holders of Series A Preferred at least twenty (20) days prior to the date on
which any Organic Change shall take place.
6.1H. MANDATORY CONVERSION. The Corporation may at any time require the
conversion of all of the outstanding Series A Preferred if the Corporation is at
such time effecting a firm commitment underwritten Public Offering of shares of
its Common Stock in which: (i) the aggregate price paid by the public for the
shares shall be at least $15,000,000; (ii) the price per share paid by the
public for such shares shall be at least three hundred percent (300%) of the
Conversion Price in effect immediately prior to the closing of the sale of such
shares pursuant to the Public Offering, and; (iii) the holders of the Series A
Preferred are permitted to include and sell in such public offering, as a
Piggyback Registration under the Registration Agreement, subject to reduction in
the number of such shares to be sold due to underwriting limitations, all
Registrable Securities (as defined in the Registration Agreement). Any such
mandatory conversion shall only be effected at the time of and subject to the
closing of the sale of such shares pursuant to such Public Offering and upon
written notice of such mandatory conversion delivered to all holders of Series A
Preferred at least seven (7) days prior to such closing.
SECTION 7. LIQUIDATING DIVIDENDS.
If the Corporation declares or pays a dividend upon the Common Stock
payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a "LIQUIDATING
DIVIDEND"), then the Corporation shall pay to the holders of Series A Preferred
at the time of payment thereof the Liquidating Dividends which would have been
paid on the shares of Conversion Stock had such Series A Preferred been
converted immediately prior to the date on which a record is taken for such
Liquidating Dividend, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
SECTION 8. PURCHASE RIGHTS.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"PURCHASE RIGHTS"), then each holder of Series A Preferred shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Conversion Stock acquirable upon conversion of such
holder's Series A Preferred immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
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SECTION 9. EVENTS OF NONCOMPLIANCE.
9.1A. DEFINITION. If any of the following shall have occurred and the
Corporation shall have received notice from any holder of Series A Preferred, an
Event of Noncompliance shall have occurred:
(i) the Corporation fails to pay on any date of payment for
any dividend the full amount of dividends then accrued on the Series A
Preferred, whether or not such payment is legally permissible or is prohibited
by any agreement to which the Corporation is subject;
(ii) the Corporation fails to make any redemption payment with
respect to the Series A Preferred which it is required to make hereunder,
whether or not such payment is legally permissible or is prohibited by any
agreement to which the Corporation is subject;
(iii) the Corporation breaches or otherwise fails to perform
or observe any other material covenant or material agreement set forth herein or
in the Purchase Agreement or in any other agreement between any Series A
Preferred holder and the Corporation, and the Corporation continues to do so for
thirty (30) days;
(iv) any material representation or material warranty
contained in the Purchase Agreement or required to be furnished to any holder of
Series A Preferred pursuant to the Purchase Agreement or any other agreement
between any Series A Holder and the Corporation, or any information contained in
writing furnished by the Corporation or any Subsidiary to any holder of Series A
Preferred, is false or misleading in any material respect on the date made or
furnished;
(v) the Corporation or any Subsidiary makes an assignment for
the benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Corporation or any Subsidiary bankrupt or insolvent; or any
order for relief with respect to the Corporation or any Subsidiary is entered
under the Federal Bankruptcy Code; or the Corporation or any Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Corporation or any Subsidiary or of any
substantial part of the assets of the Corporation or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Corporation or any Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction; or any such petition
or application is filed, or any such proceeding is commenced, against the
Corporation or any Subsidiary and either (a) the Corporation or any such
Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein or (b) such petition, application or proceeding is not
dismissed within sixty (60) days;
(vi) a judgment in excess of $100,000 is rendered against the
Corporation or any Subsidiary and, within sixty (60) days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal, or
within sixty (60) days after the expiration of any such stay, such judgment is
not discharged;
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(vii) the Corporation or any Subsidiary defaults in the
performance of any obligation or agreement if the effect of such default is to
cause an amount exceeding $100,000 to become due prior to its stated maturity or
to permit the holder or holders of any obligation to cause an amount exceeding
$100,000 to become due prior to its stated maturity and the Corporation makes
payment of any portion of such amount, the Corporation admits or confesses that
such amount is due, or a judgment is entered reflecting that such amount is due;
(viii) the Corporation or any Subsidiary defaults in the
performance of any covenant or agreement under any credit facility with
indebtedness greater than $100,000 that is not cured or waived within ninety
(90) days; or
(ix) the Corporation's chief executive officer or chief
financial officer (as of the date of the Purchase Agreement) shall cease to be
employed by the Corporation for any reason and is not replaced within 120 days
by the approval of a majority of the Board of Directors, including the director
elected pursuant to Section 5.1A, if any.
9.1B. CONSEQUENCES OF EVENTS OF NONCOMPLIANCE.
(i) If an Event of Noncompliance of the type described in
subparagraph 9.1A(iii) has occurred and continued for a period of thirty (30)
days or any other Event of Noncompliance has occurred and is continuing, the
Series A Preferred shall immediately be entitled a dividend accruing daily at
the rate of ten percent (10%) per annum, which shall be declared payable by the
Board of Directors quarterly following the date of the Event of Noncompliance.
Thereafter, until such time as no Event of Noncompliance exists, the dividend
rate shall increase automatically at the end of each succeeding 90-day period by
an additional increment of two (2) percentage point(s) (but in no event shall
the dividend rate exceed fourteen percent (14%)). Any increase of the dividend
rate resulting from the operation of this subparagraph shall terminate as of the
close of business on the date on which no Event of Noncompliance exists, subject
to subsequent increases pursuant to this paragraph.
(ii) If an Event of Noncompliance of the type described in
subparagraph 9.1A(iii) has occurred and continued for a period of thirty (30)
days or any other Event of Noncompliance has occurred and is continuing, the
holder or holders of a majority of the Series A Preferred then outstanding may
demand (by written notice delivered to the Corporation) immediate redemption of
all or any portion of the Series A Preferred owned by such holder or holders at
a price per share equal to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon). The Corporation shall give prompt written notice of
such election to the other holders of Series A Preferred (but in any event
within five (5) days after receipt of the initial demand for redemption), and
each such other holder may demand immediate redemption of all or any portion of
such holder's Series A Preferred by giving written notice thereof to the
Corporation within seven days after receipt of the Corporation's notice. The
Corporation shall redeem all Series A Preferred as to which rights under this
paragraph have been exercised within fifteen (15) days after receipt of the
initial demand for redemption.
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(iii) If an Event of Noncompliance of the type described in
subparagraph 9.1A(v) has occurred, all of the Series A Preferred then
outstanding shall be subject to immediate redemption by the Corporation (without
any action on the part of the holders of the Series A Preferred) at a price per
share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon). The Corporation shall immediately redeem all Series A
Preferred upon the occurrence of such Event of Noncompliance.
(iv) If any Event or Events of Noncompliance exist for an
aggregate of ninety (90) days (whether or not such days are consecutive), the
Conversion Price of the Series A Preferred shall be reduced immediately by ten
percent (10%) of the Conversion Price in effect immediately prior to such
adjustment (the "FIRST ADJUSTMENT"). If any Event or Events of Noncompliance
exist for an aggregate of (90) days after the First Adjustment (whether or not
such days are consecutive and whether or not such days immediately follow the
First Adjustment), the Conversion Price shall be reduced immediately by ten
percent (10%) of what the Conversion Price would have been immediately prior to
such adjustment if the First Adjustment had not been made (the "SECOND
ADJUSTMENT"). If any Event or Events of Noncompliance exist for an aggregate of
(90) days after the Second Adjustment (whether or not such days are consecutive
and whether or not such days immediately follow the Second Adjustment), the
Conversion Price shall be reduced immediately by ten percent (10%) of what the
Conversion Price would have been immediately prior to such adjustment if the
First and Second Adjustments had not been made. In no event shall any Conversion
Price adjustment be rescinded, and in no event shall there be more than three
(3) Conversion Price adjustments pursuant to this subparagraph.
For example, assume that the Conversion Price of the Series A
Preferred is $2.00. If Events of Noncompliance are in existence for an aggregate
of ninety (90) days, the Conversion Price would be reduced immediately by ten
percent (10%) of $2.00, or $.20, for a new Conversion Price of $1.80. If Events
of Noncompliance exist for an additional ninety (90) days, the existing
Conversion Price would be reduced by ten percent (10%) of what the Conversion
Price would have been if there had been no previous adjustment pursuant to this
paragraph (i.e., $2.00), or $.20, for a new Conversion Price of $1.60. Then
assume that there is a two-for-one stock split, in which case the Conversion
Price would be decreased hereunder from $1.60 to $.80, and assume that Events of
Noncompliance exist for an additional ninety (90) days. In this case, the
Conversion Price would be reduced by ten percent (10%) of what the Conversion
Price would have been immediately prior to such adjustment if there had been no
previous adjustments pursuant to this paragraph (i.e. $1.00), or $.10, for a new
Conversion Price of $.70.
(v) If any Event of Noncompliance of the type described in
subparagraph 9.1A(iii) has occurred and has continued for sixty (60) days or any
other Event of Noncompliance has occurred and is continuing, the number of
directors constituting the Corporation's board of directors shall, at the
request of the holder or holders of a majority of the Series A and B Preferred
then outstanding, be increased by such number which shall constitute a minimum
majority of the Board of Directors, and the holders of Series A and B Preferred
shall have the special right, voting separately as a single class (with each
share of Series A and B Preferred being entitled to one vote) and to the
exclusion of all other classes of the Corporation's stock, to elect individuals
to fill such newly created directorships, to remove any individuals elected
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to such directorships and to fill any vacancies in such directorships. The
special right of the holders of Series A and B Preferred to elect members of the
Board of Directors may be exercised at the special meeting called pursuant to
this subparagraph (v), at any annual or other special meeting of stockholders
and, to the extent and in the manner permitted by applicable law, pursuant to a
written consent in lieu of a stockholders meeting. Such special right shall
continue until such time as there is no longer any Event of Noncompliance in
existence, at which time such special right shall terminate subject to revesting
upon the occurrence and continuation of any Event of Noncompliance which gives
rise to such special right hereunder.
At any time when such special right has vested in the holders
of Series A and B Preferred, a proper officer of the Corporation shall, upon the
written request of the holder of at least ten percent (10%) of the Series A and
B Preferred then outstanding, addressed to the secretary of the Corporation,
call a special meeting of the holders of Series A and B Preferred for the
purpose of electing directors pursuant to this subparagraph. Such meeting shall
be held at the earliest legally permissible date at the principal office of the
Corporation, or at such other place designated by the holders of at least ten
percent (10%) of the Series A and B Preferred then outstanding. If such meeting
has not been called by a proper officer of the Corporation within ten (10) days
after personal service of such written request upon the secretary of the
Corporation or within twenty (20) days after mailing the same to the secretary
of the Corporation at its principal office, then the holders of at least ten
percent (10%) of the Series A and B Preferred then outstanding may designate in
writing one of their number to call such meeting at the expense of the
Corporation, and such meeting may be called by such Person so designated upon
the notice required for annual meetings of stockholders and shall be held at the
Corporation's principal office, or at such other place designated by the holders
of at least 10% of the Series A and B Preferred then outstanding. Any holder of
Series A and B Preferred so designated shall be given access to the stock record
books of the Corporation for the purpose of causing a meeting of stockholders to
be called pursuant to this subparagraph.
At any meeting or at any adjournment thereof at which the
holders of Series A and B Preferred have the special right to elect directors,
the presence, in person or by proxy, of the holders of a majority of the Series
A and B Preferred then outstanding shall be required to constitute a quorum for
the election or removal of any director by the holders of the Series A and B
Preferred exercising such special right. The vote of a majority of such quorum
shall be required to elect or remove any such director.
Any director so elected by the holders of Series A and B
Preferred shall continue to serve as a director until the expiration of the
lesser of: (a) a period of six (6) months following the date on which there is
not longer any Event of Noncompliance in existence; or (b) the remaining period
of the full term for which such director has been elected. After the expiration
of such six (6) month period or when the full term for which such director has
been elected ceases (provided that the special right to elect directors has
terminated), as the case may be, the number of directors constituting the board
of directors of the Corporation shall decrease to such number as constituted the
whole board of directors of the Corporation immediately prior to the occurrence
of the Event or Events of Noncompliance giving rise to the special right to
elect directors.
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(vi) If any Event of Noncompliance exists, each holder of
Series A Preferred shall also have any other rights which such holder is
entitled to under any contract or agreement at any time and any other rights
which such holder may have pursuant to applicable law.
SECTION 10. REGISTRATION OF TRANSFER.
The Corporation shall keep at its principal office a register for the
registration of Series A Preferred. Upon the surrender of any certificate
representing Series A Preferred at such place, the Corporation shall, at the
request of the record holder of such certificate, execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Series A Preferred
represented by such new certificate from the date to which dividends have been
fully paid on such Series A Preferred represented by the surrendered
certificate.
SECTION 11. REPLACEMENT.
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing shares
of Series A Preferred, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Corporation (provided
that if the holder is a financial institution or other institutional investor
its own agreement shall be satisfactory), or, in the case of any such mutilation
upon surrender of such certificate, the Corporation shall (at its expense)
execute and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue on the
Series A Preferred represented by such new certificate from the date to which
dividends have been fully paid on such lost, stolen, destroyed or mutilated
certificate.
SECTION 12. DEFINITIONS.
"CHANGE IN OWNERSHIP" has the meaning set forth in paragraph 4.1G
hereof.
"COMMON STOCK" means, collectively, the Corporation's Common Stock and
any capital stock of any class of the Corporation hereafter authorized which is
not limited to a fixed sum or percentage of par or stated value in respect to
the rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation.
"CONVERSION STOCK" means shares of the Corporation's Common Stock, par
value $0.001 per share; provided that if there is a change such that the
securities issuable upon conversion of the Series A Preferred are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the
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security issuable upon conversion of the Series A Preferred if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"CONVERTIBLE SECURITIES" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"FUNDAMENTAL CHANGE" has the meaning set forth in paragraph 4L hereof.
"JUNIOR SECURITIES" means any capital stock or other equity securities
of the Corporation, except for the Series A Preferred and Series B Preferred.
"LIQUIDATION VALUE" of any share of Series A Preferred as of any
particular date shall be equal to $2.00 (as equitably adjusted for subsequent
stock splits, stock combinations, stock dividends and recapitalizations).
"LIQUIDATION VALUE" of any share of Series B Preferred as of any
particular date shall be equal to $4.00 (as equitably adjusted for subsequent
stock splits, stock combinations, stock dividends and recapitalizations).
"MARKET PRICE" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of twenty-one (21) days consisting of
the day as of which "Market Price" is being determined and the twenty (20)
consecutive business days prior to such day. If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Market Price" shall be the fair value thereof
determined jointly by the Corporation and the holders of a majority of the
Series A and B Preferred. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly selected by the Corporation
and the holders of a majority of the Series A and B Preferred. The determination
of such appraiser shall be final and binding upon the parties, and the
Corporation shall pay the fees and expenses of such appraiser.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities; provided, however, that the
term "Options" shall expressly exclude options or securities issued as expressly
contemplated by paragraph 6.1B(iii).
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"PERSON" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"PUBLIC OFFERING" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force.
"PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated as of
March 30, 1999, by and among the Corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"REGISTRATION AGREEMENT" means the Registration Agreement as defined in
the Purchase Agreement.
"REDEMPTION DATE" as to any share of Series A Preferred or Series B
Preferred means the date specified in the notice of any redemption at the
holder's option or the applicable date specified herein in the case of any other
redemption; provided that no such date shall be a Redemption Date unless the
Liquidation Value of such share (plus all accrued and unpaid dividends thereon
and any required premium with respect thereto) is actually paid in full on such
date, and if not so paid in full, the Redemption Date shall be the date on which
such amount is fully paid.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.
SECTION 13. AMENDMENT AND WAIVER.
No amendment, modification or waiver shall be binding or effective with
respect to any provision of Sections 1 to 14 hereof without the prior written
consent of the holders of a majority of the Series A Preferred outstanding at
the time such action is taken; provided that no such action shall change (a) the
rate at which or the manner in which dividends on the Series A Preferred accrue
or the times at which such dividends become payable or the amount payable on
redemption of the Series A Preferred or the times at which redemption of Series
A Preferred is to occur, without the prior written consent of the holders of at
least two-thirds of the Series A Preferred then outstanding,
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(b) the Conversion Price of the Series A Preferred or the number of shares or
class of stock into which the Series A Preferred is convertible, without the
prior written consent of the holder of at least two-thirds of the Series A
Preferred then outstanding or (c) the percentage required to approve any change
described in clauses (a) and (b) above, without the prior written consent of the
holders of at least two-thirds of the Series A Preferred then outstanding; and
provided further that no change in the terms hereof may be accomplished by
merger or consolidation of the Corporation with another corporation or entity
unless the Corporation has obtained the prior written consent of the holders of
the applicable percentage of the Series A Preferred then outstanding.
SECTION 14. NOTICES.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices and
(ii) to any stockholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).
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EXHIBIT 3.3
BYLAWS
OF
WORLD COMMERCE ONLINE, INC.
(A DELAWARE CORPORATION)
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
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ARTICLE ONE - OFFICES ........................................................................ 1
1. Registered Office............................................ 1
2. Other Offices................................................ 1
ARTICLE TWO - MEETINGS OF STOCKHOLDERS......................................................... 1
1. Place........................................................ 1
2. Time of Annual Meeting....................................... 1
3. Call of Special Meetings..................................... 1
4. Conduct of Meetings.......................................... 1
5. Notice and Waiver of Notice.................................. 1
6. Business of Special Meeting.................................. 2
7. Quorum....................................................... 2
8. Required Vote................................................ 2
9. Voting of Shares............................................. 2
10. Proxies...................................................... 2
11. Stockholder List............................................. 3
12. Action Without Meeting....................................... 3
13. Fixing Record Date........................................... 3
14. Inspectors and Judges........................................ 3
ARTICLE THREE - DIRECTORS ............................................................. 4
1. Number, Election and Term.................................... 4
2. Vacancies.................................................... 4
3. Powers....................................................... 4
4. Place of Meetings............................................ 4
5. Annual Meeting............................................... 4
6. Regular Meetings............................................. 5
7. Special Meetings and Notice.................................. 5
8. Quorum and Required Vote..................................... 5
9. Action Without Meeting....................................... 5
10. Telephone Meetings........................................... 5
11. Committees................................................... 5
12. Compensation of Directors.................................... 6
ARTICLE FOUR - OFFICERS ............................................................. 6
1. Positions.................................................... 6
2. Election of Specified Officers Board......................... 6
3. Election or Appointment of Other Officers.................... 6
4. Salaries..................................................... 6
5. Term......................................................... 6
6. Chairman of the Board........................................ 7
7. President.................................................... 7
8. Vice Presidents.............................................. 7
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<TABLE>
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9. Secretary.................................................... 7
10. Treasurer.................................................... 7
ARTICLE FIVE - CERTIFICATES FOR SHARES......................................................... 8
1. Issue of Certificates........................................ 8
2. Legends for Preferences and
Restrictions on Transfer..................................... 8
3. Facsimile Signatures......................................... 9
4. Lost Certificates............................................ 9
5. Transfer of Shares........................................... 9
6. Registered Stockholders...................................... 9
ARTICLE SIX - GENERAL PROVISIONS ............................................................. 9
1. Dividends.................................................... 9
2. Reserves..................................................... 9
3. Checks....................................................... 9
4. Fiscal Year.................................................. 9
ARTICLE SEVEN - AMENDMENTS OF BYLAWS........................................................... 10
</TABLE>
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WORLD COMMERCE ONLINE, INC.
BYLAWS
ARTICLE ONE
OFFICES
Section 1. Registered Office. The registered office of WORLD COMMERCE
ONLINE, INC., a Delaware corporation (the "Corporation"), shall be located in
any city in the State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places outside the State of Delaware, as the Board of Directors of the
Corporation (the "Board of Directors") may from time to time determine or as the
business of the Corporation may require.
ARTICLE TWO
MEETINGS OF STOCKHOLDERS
Section 1. Place. All annual meetings of stockholders shall be held at
such place, within or without the State of Delaware, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Special meetings of stockholders may be held at such
place, within or without the State of Delaware, and at such time as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Time of Annual Meeting. Annual meetings of stockholders
shall be held on such date and at such time fixed, from time to time, by the
Board of Directors, provided that there shall be an annual meeting held every
calendar year at which the stockholders shall elect a board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. Call of Special Meetings. Special meetings of the
stockholders may be called by the Chairman of the Board or the Board of
Directors, or by the Secretary upon receipt of the written request of the
holders of not less than a majority of all shares issued and outstanding and
entitled to vote at the meeting.
Section 4. Conduct of Meetings. The Chairman of the Board (or in his
absence, a designee of the Chairman of the Board) shall preside at the annual
and special meetings of stockholders and shall be given full discretion in
establishing the rules and procedures to be followed in conducting the meetings,
except as otherwise provided by law or in these Bylaws.
Section 5. Notice and Waiver of Notice. Written or printed notice
stating the place, day and hour of the meeting and the purpose or purposes for
which the meeting is called (and any additional information as required by law),
shall be delivered not less than ten (10) nor more than sixty (60) days before
the day of the meeting, either personally or by first-class mail, by or at the
direction of
<PAGE> 5
the Chairman of the Board, the Secretary, or the officer or person calling the
meeting, to each stockholder of record entitled to vote at such meeting. If the
notice is mailed, such notice shall be deemed to be delivered when deposited in
the United States mail addressed to the stockholder at his address as it appears
on the stock transfer books of the Corporation, with postage thereon prepaid. If
a meeting is adjourned to another time and/or place, and if an announcement of
the adjourned time and/or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the Board of Directors,
after adjournment, fixes a new record date for the adjourned meeting or if the
adjournment is for more than thirty (30) days. Notice need not be given to any
stockholder who submits a written waiver of notice by him before or after the
time stated therein. Attendance of a stockholder at a meeting of stockholders
shall constitute a waiver of notice of such meeting, except when a stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders need be specified in any
written waiver of notice.
Section 6. Business of Special Meeting. Business transacted at any
special meeting shall be confined to the purposes stated in the notice thereof.
Section 7. Quorum. The holders of a majority of the shares entitled to
vote, represented in person or by proxy, shall constitute a quorum at meetings
of stockholders, except as otherwise provided in the Corporation's certificate
of incorporation (the "Certificate of Incorporation"). If, however, a quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders present in person or represented by proxy shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted that might have been transacted at the meeting as originally notified
and called. The stockholders present at a duly organized meeting may continue to
transact business notwithstanding the withdrawal of some stockholders prior to
adjournment, but in no event shall a quorum consist of the holders of less than
one-third (1/3) of the shares entitled to vote and thus represented at such
meeting.
Section 8. Required Vote. The vote of the holders of a majority of the
shares entitled to vote and represented at a meeting at which a quorum is
present shall be the act of the Corporation's stockholders, unless the vote of a
greater number is required by law, the Certificate of Incorporation, or these
Bylaws.
Section 9. Voting of Shares. Each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders, except to the extent that the voting rights of the
shares of any class are limited or denied by the Certificate of Incorporation or
the Delaware General Corporation Law.
Section 10. Proxies. A stockholder may vote in person or by proxy
executed in writing by the stockholder or by his duly authorized
attorney-in-fact. No proxy shall be voted or acted upon after six (6) months
from the date of its execution unless a longer duration, up to seven (7) years,
is specified in the proxy. Each proxy shall be irrevocable unless revoked by
another instrument or transmission, or unless a proxy bearing a later date is
properly executed and filed with the Corporation.
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Section 11. Stockholder List. The officer or agent having charge of the
Corporation's stock transfer books shall make, at least ten (10) days before
each meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of, and the number and class and series, if any, of shares held
by each. Such list, for a period of ten (10) days prior to such meeting, shall
be subject to inspection by any stockholder at any time during the usual
business hours at the place where the meeting is to be held. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole time of the
meeting. The original stock transfer books shall be prima facie evidence as to
which stockholders are entitled to examine such list or transfer book or to vote
at any such meeting of stockholders.
Section 12. Action Without Meeting. Any action required by the statutes
to be taken at a meeting of stockholders, or any action that may be taken at a
meeting of the stockholders, may be taken without a meeting or notice if a
consent or consents, in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted with respect to
the subject matter thereof, and such consent shall be delivered to the
Corporation by delivery to its registered office, its principal place of
business, or an officer or agent of the Corporation, having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery to the
Corporation's registered office shall be by hand or certified mail, return
receipt requested. Such consent shall have the same force and effect as a vote
of stockholders taken at such a meeting, pursuant to the Delaware General
Corporation Law.
Section 13. Fixing Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper purposes, the
Board of Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than sixty
(60) days, and, in case of a meeting of stockholders, not less than ten (10)
days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
date on which the notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of stockholders.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof, except where the Board of Directors fixes a
new record date for the adjourned meeting.
Section 14. Inspectors and Judges. The Board of Directors in advance of
any meeting may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If any inspector or inspectors, or judge or judges, are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by the Board of
Directors in advance of the meeting, or at the meeting by the person presiding
thereat. The inspectors or judges, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots and consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and
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tabulate votes, ballots and consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors or
judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them, and execute a certificate of any
fact found by him or them.
ARTICLE THREE
DIRECTORS
Section 1. Number, Election and Term. The number of Board of Directors
shall be fixed from time to time by resolution of the Board of Directors, but
the number shall not be less than one (1) nor more than nine (9); provided,
however, no director's term shall be shortened by reason of a resolution
reducing the number of directors. The directors shall be elected at the annual
meeting of the stockholders by a plurality of the votes cast at the election,
except as provided in Section 2 of this Article, and each director elected shall
hold office for the term for which he is elected and until his successor is
elected and qualified. Directors need not be residents of the State of Delaware,
stockholders of the Corporation or citizens of the United States. Unless
provided otherwise by law, any director may be removed at any time, with or
without cause, at a special meeting of the stockholders called for that purpose
by a vote of two-thirds of the voting power of the issued and outstanding stock
entitled to vote thereon.
Section 2. Vacancies. A director may resign at any time by giving
written notice to the Board of Directors or the Chairman of the Board. Such
resignation shall take effect as of the date of receipt of such notice or at any
later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. Any
vacancy occurring in the Board of Directors and any directorship to be filled by
reason of an increase in the size of the Board of Directors may be filled by the
affirmative vote of a majority of the current directors, though less than a
quorum of the Board of Directors, or may be filled by an election at an annual
or special meeting of the stockholders called for that purpose. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office, or until the next election of one or more directors by
stockholders if the vacancy is caused by an increase in the number of directors.
Section 3. Powers. The business and affairs of the Corporation shall be
managed by its Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these Bylaws directed or required to be
exercised and done by the stockholders.
Section 4. Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Delaware.
Section 5. Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held, without call or notice, immediately following
each annual meeting of stockholders.
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Section 6. Regular Meetings. Regular meetings of the Board of Directors
may also be held without notice at such time and at such place as shall from
time to time be determined by the Board of Directors.
Section 7. Special Meetings and Notice. Special meetings of the Board
of Directors may be called by the Chairman of the Board and shall be called by
the Secretary on the written request of any two (2) directors. Written notice of
special meetings of the Board of Directors shall be given to each director at
least twenty-four (24) hours before the meeting. Except as required by the
Delaware General Corporation Law, neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting. Notices to
directors shall be in writing and delivered personally, mailed to the directors
at their addresses appearing on the books of the Corporation, or sent via
facsimile to the number appearing on the books of the Corporation. Notice by
mail shall be deemed to be given at the time when the same shall be received.
Notice to directors may also be given by telegram, and shall be deemed delivered
when the same shall be deposited at a telegraph office for transmission and all
appropriate fees therefor have been paid. Whenever any notice is required to be
given to any director, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except when a director attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 8. Quorum and Required Vote. A majority of the directors shall
constitute a quorum for the transaction of business and the act of the majority
of the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors, unless a greater number is required by the
Certificate of Incorporation. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present. At such adjourned meeting at which a quorum shall be
present, any business may be transacted that might have been transacted at the
meeting as originally notified and called.
Section 9. Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors or committee thereof may be
taken without a meeting if, before or after the action, a consent in writing,
setting forth the action taken, is signed by all of the members of the Board of
Directors or the committee, as the case may be, and such consent shall have the
same force and effect as a unanimous vote at a meeting.
Section 10. Telephone Meetings. Directors and committee members may
participate in and hold a meeting by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meetings shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground the meeting is not lawfully called or convened.
Section 11. Committees. The Board of Directors, by resolution adopted
by a majority of the whole Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of which,
to the extent provided in such resolution, shall have and may exercise all of
the authority of the Board of Directors in the business and affairs of the
Corporation
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<PAGE> 9
except where the action of the full Board of Directors is required by the
Delaware General Corporation Law. Vacancies in the membership of a committee
shall be filled by the Board of Directors at a regular or special meeting of the
Board of Directors. The executive committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required. The
designation of any such committee and the delegation thereto of authority shall
not operate to relieve the Board of Directors, or any member thereof, of any
responsibility imposed upon it or him by law.
Section 12. Compensation of Directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE FOUR
OFFICERS
Section 1. Positions. The officers of the Corporation shall consist of
a Chairman of the Board, a President, a Secretary and a Treasurer. Any two or
more offices may be held by the same person.
Section 2. Election of Specified Officers by Board. The Chairman of the
Board, the President, the Secretary and the Treasurer shall be elected by the
Board of Directors.
Section 3. Election or Appointment of Other Officers. One or more Vice
Presidents and such other officers and assistant officers and agents as may be
deemed necessary may be elected or appointed by the Board of Directors, or,
unless otherwise specified herein, by the Chairman of the Board. The Board of
Directors shall be advised of appointments by the Chairman of the Board at or
before the next scheduled Board of Directors meeting.
Section 4. Salaries. The salaries of all officers of the Corporation to
be elected by the Board of Directors pursuant to Article Four, Section 2 hereof
shall be fixed from time to time by the Board of Directors or pursuant to its
discretion. The salaries of all other elected or appointed officers of the
Corporation shall be fixed from time to time by the Chairman of the Board or
pursuant to his direction.
Section 5. Term. The officers of the Corporation shall hold office
until their successors are chosen and qualified. Any officer or agent elected or
appointed by the Board of Directors or the Chairman of the Board may be removed,
with or without cause, by the Board of Directors whenever in its judgment the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Any officers or agents appointed by the Chairman of the Board pursuant to
Section 3 of this Article Four may also be removed from such officer positions
by the Chairman of the Board, with or without cause. Any vacancy occurring in
any office of the Corporation by death, resignation, removal or otherwise shall
be filled by the Board of Directors, or, in the case of an officer appointed by
the Chairman of the Board, by the Chairman of the Board or the Board of
Directors.
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Section 6. Chairman of the Board. The Chairman of the Board shall be a
member of the Board of Directors and an ex officio member of all standing
committees, and shall be the Chief Executive Officer of the Corporation. The
Chief Executive Officer shall be the most senior officer of the Corporation and
shall be responsible for the normal day-to-day management, operation and
maintenance of the business and affairs of the Corporation in accordance with
the Corporation's annual business plan and budget. The Chief Executive Officer
shall be responsible for interpretation and executive implementation of the
corporate policies set by the Board of Directors, and shall perform all the
duties and have and exercise all rights and powers usually pertaining and
attributable, by law, custom, or otherwise, to the Chief Executive Officer. The
Chief Executive Officer shall have the authority to execute contracts, deeds,
notes, mortgages, bonds and other instruments and papers in the name of the
Corporation and on its behalf. The Chief Executive Officer shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors. At
each annual meeting of the stockholders and at each annual meeting of the Board
of Directors, he shall present a report of the business and affairs of the
Corporation. The Chief Executive Officer shall coordinate and supervise the
activities of all other officers of the Corporation. The Chief Executive Officer
shall have such other powers and shall perform such other duties as shall be
designated by the Board of Directors. The Chief Executive Officer shall
designate a person to perform his duties and exercise his powers in his absence.
Section 7. President. The President shall have such powers and shall
perform such duties as shall be designated by the Chairman of the Board.
Section 8. Vice Presidents. The Vice Presidents in the order of their
seniority, unless otherwise determined by the Chairman of the Board or the Board
Directors, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President. They shall have such other
powers and perform such other duties as the Chairman of the Board or the Board
of Directors may from time to time designate.
Section 9. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the stockholders and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or Chairman of the Board, under whose supervision he shall be. He
shall keep in safe custody the seal of the Corporation and, when authorized by
the Board of Directors, affix the same to any instrument requiring it.
Section 10. Treasurer. The Treasurer shall have the custody of
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Chairman of the Board and the Board of Directors at its regular
meetings or when the Board of Directors so requires an account of all his
transactions as treasurer and of the financial condition of the Corporation.
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ARTICLE FIVE
CERTIFICATES FOR SHARES
Section 1. Issue of Certificates. The shares of the Corporation shall
be represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates (and upon request every holder of uncertificated shares) shall
be entitled to have a certificate signed by, or in the name of the Corporation
by the chairman or vice-chairman of the Board of Directors, and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, representing the number of shares registered in certificate form.
Section 2. Legends for Preferences and Restrictions on Transfer. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided by law, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
A written restriction on the transfer or registration of transfer of a
security of the Corporation, if permitted by law and noted conspicuously on the
certificate representing the security, may be enforced against the holder of the
restricted security or any successor or transferee of the holder including an
executor, administrator, trustee, guardian or other fiduciary entrusted with
like responsibility for the person or estate of the holder. Unless noted
conspicuously on the certificate representing the security, a restriction, even
though permitted by law, is ineffective except against a person with actual
knowledge of the restriction. If the Corporation issues any shares that are not
registered under the Securities Act of 1933, as amended, and registered or
qualified under the applicable state securities laws, unless otherwise provided
by the rules and regulations promulgated by the securities and Exchange
Commission, the transfer of any such shares shall be restricted substantially in
accordance with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION FOR THESE SHARES
UNDER THE ACT AN APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF THE
CORPORATION'S COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
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Section 3. Facsimile Signatures. Any and all signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of the issue.
Section 4. Lost Certificates. The Corporation may issue a new
certificate of stock in place of any certificate therefore issued by it, alleged
to have been lost, stolen or destroyed, and the Corporation may require the
owner of the lost, stolen, or destroyed certificate, or his legal representative
to furnish an affidavit as to such loss, theft or destruction and to give the
Corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 5. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive rights of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Delaware.
ARTICLE SIX
GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
cash, property, or its own shares pursuant to law and subject to the provisions
of the Certificate of Incorporation.
Section 2. Reserves. The Board of Directors may by resolution create a
reserve or reserves out of earned surplus for any proper purpose or purposes,
and may abolish any such reserve in the same manner.
Section 3. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the Corporation shall end on
December 31 of each year, unless otherwise fixed by resolution of the Board of
Directors.
Section 5. Conflicts. These Bylaws are subject to the Certificate of
Incorporation and any Certificate of Designation to such Certificate of
Incorporation filed with the Secretary of State of the State of Delaware, and
any conflict between these Bylaws and the Certificate of Incorporation or
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any Certificate of Designation shall be resolved in favor of the Certificate of
Incorporation or Certificate of Designation.
ARTICLE SEVEN
AMENDMENT OF BYLAWS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted at any meeting of the Board of Directors at which a quorum is present,
by the affirmative vote of a majority of the directors present at such meeting.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of
the Bylaws of World Commerce Online, Inc., a Delaware corporation, as adopted by
the Board of Directors as of the date hereof.
IN WITNESS WHEREOF, I have hereunto subscribed my name as of September
30, 1999.
/s/ Robert Shaw
-----------------------------------
Robert Shaw
Secretary
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EXHIBIT 3.4
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
WORLD COMMERCE ONLINE, INC.
AND
INTERPRISE TECHNOLOGY PARTNERS, L.P.
MARCH 30, 1999
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CONTENTS
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Section 1. Authorization and Initial Closing..........................................................1
1A. Authorization of the Stock.................................................................1
1B. Purchase and Sale of the Stock.............................................................1
Section 2. Conditions of the Purchasers' Obligations..................................................2
2A. Conditions to Initial Closing..............................................................2
Section 3. Covenants..................................................................................4
3A. Financial Statements and Other Information.................................................4
3B. Inspection of Property.....................................................................5
3C. Restrictions...............................................................................6
3D. Affirmative Covenants......................................................................7
3E. Current Public Information.................................................................8
3F. Limited Preemptive Rights..................................................................8
3G. Public Disclosures.........................................................................9
3H. Hart-Scott-Rodino Compliance...............................................................9
Section 4. Transfer of Restricted Securities..........................................................10
Section 5. Representations and Warranties of the Company..............................................10
5A. Organization and Corporate Power...........................................................10
5B. Capital Stock and Related Matters..........................................................10
5C. Authorization; No Breach...................................................................11
5D. Subsidiaries; Investments..................................................................11
5E. Conduct of Business; Liabilities...........................................................11
5F. Tax Matters................................................................................12
5G. Litigation, etc............................................................................12
5H. Brokerage..................................................................................12
5I. Governmental Consent, etc..................................................................12
5J. ERISA......................................................................................13
5K. Compliance with Laws.......................................................................13
5L. Disclosure.................................................................................13
5M. Closing Date...............................................................................13
Section 6. Definitions................................................................................13
Section 7. Miscellaneous..............................................................................17
7A. Expenses...................................................................................17
7B. Remedies...................................................................................17
7C. Purchasers'Investment Representations......................................................18
7D. Consent to Amendments......................................................................18
7E. Survival of Representations and Warranties.................................................19
7F. Successors and Assigns.....................................................................19
7G. Generally Accepted Accounting Principles...................................................19
7H. Severability...............................................................................19
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7I. Counterparts...............................................................................19
7J. Descriptive Headings; Interpretation.......................................................19
7K. Governing Law..............................................................................20
7L. Notices....................................................................................20
7M. Rights.....................................................................................21
7N. Amendments.................................................................................21
7O. Several Obligations........................................................................21
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LIST OF EXHIBITS AND SCHEDULES
Purchase Schedule
Schedule of Exceptions
Exhibit A-1 -- Certificate of Designation
Exhibit A-2 -- Articles of Incorporation
Exhibit A-3 -- Bylaws
Exhibit B -- Registration Agreement
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
March 30, 1999, by and among WORLD COMMERCE ONLINE, INC., a Nevada corporation
(the "COMPANY"), INTERPRISE TECHNOLOGY PARTNERS, L.P., a Delaware limited
partnership ("INTERPRISE"), and the other Persons identified on the signature
pages attached hereto (together with Interprise, the "PURCHASERS"). Except as
otherwise indicated herein, capitalized terms used herein are defined in Section
6 hereof.
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement, intending to be legally
bound, hereby agree as follows:
SECTION 1. AUTHORIZATION AND INITIAL CLOSING.
1A. AUTHORIZATION OF THE STOCK. The Company shall authorize
the issuance and sale to the Purchasers of up to 4,000,000 shares of its Class A
Convertible Preferred Stock, par value $.001 per share (the "PREFERRED STOCK"),
having the rights and preferences set forth on the form of certificate of
designation attached hereto as Exhibit A-1 (the "CERTIFICATE OF DESIGNATION").
1B. PURCHASE AND SALE OF THE STOCK.
(i) At the Initial Closing (as defined below), the Company
shall sell to the Purchasers and, subject to the terms and conditions set forth
herein, the Purchasers shall purchase from the Company, 250,000 shares of
Preferred Stock at a price of $2.00 per share. The initial closing of the
purchase and sale of the Preferred Stock pursuant hereto (the "INITIAL CLOSING")
shall take place at the offices of Hogan & Hartson L.L.P., 555 Thirteenth
Street, N.W., Washington, D.C. 20004-1109 at 10:00 a.m. on the date of the
Initial Closing. At the Initial Closing, after the purchase and sale of the
Preferred Stock pursuant hereto, the Company shall deliver to each Purchaser
stock certificates evidencing the Preferred Stock to be purchased by such
Purchaser, registered in such Purchaser's name, upon payment of the purchase
price thereof by check, cancellation of indebtedness or wire transfer of
immediately available funds to such account as is designated by the Company. In
the event that payment by a Purchaser is made, in whole or in part, by
cancellation of indebtedness, then such Purchaser shall surrender to the Company
for cancellation at the Initial Closing any evidence of such indebtedness or
shall execute an instrument of cancellation in form and substance acceptable to
the Company. In addition, the Company shall deliver to any Purchaser choosing to
pay any part of the purchase price of the Preferred Stock by cancellation of
indebtedness, a check in the amount of any interest accrued on such indebtedness
through the Initial Closing.
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(ii) From time to time after the Initial Closing, the Company
shall sell to the Purchasers and, subject to the terms and conditions set forth
herein, the Purchasers shall purchase from the Company, up to 3,750,000 shares
of Preferred Stock at a price of $2.00 per share (as adjusted from time to time
as a result of stock dividends, stock splits, recapitalizations, and similar
events). Such additional purchases of the Preferred Stock shall be made by each
Purchaser at such times and in such amounts as are set forth on the Purchase
Schedule attached hereto. The Purchasers' obligation to purchase any additional
Preferred Stock will be conditioned on a breach or default not having occurred
under this Agreement, or any of the Company's financing or other material
agreements, as determined in Interprise's sole discretion. In addition, at the
time of any such purchase, each Purchaser shall be entitled to receive, and the
Company shall be obligated to deliver, satisfactory representations and
warranties and all other information and documentation as Interprise may
reasonably request.
(iii) In addition to the Preferred Stock which may be sold by
the Company and purchased by the Purchasers pursuant to Sections 1B(i) and (ii),
the Company hereby grants to Interprise the option to purchase from the Company,
at Interprise's election, up to 250,000 shares of Preferred Stock at a price of
$2.00 per share, which option may be exercised in whole or in part at any time
or times during the five (5) year period following the date of this Agreement.
At the time of Interprise's (or its assignee's) exercise of such option to
purchase such shares of Preferred Stock, Interprise shall be entitled to
receive, and the Company shall be obligated to deliver, satisfactory
representations and warranties and all other information and documentation as
Interprise may reasonably request. Notwithstanding anything to the contrary
contained in this Section 1B(iii), this option may only be exercised by
Interprise if the Board unanimously determines that immediately after exercise,
Interprise will transfer the shares underlying such option to a party mutually
agreeable to the Board and to Interprise.
(iv) Notwithstanding anything contained herein to the
contrary, after the Purchasers have purchased a total of $3,000,000 in Preferred
Stock, Interprise may terminate the Purchasers' commitment to make any further
purchases of Preferred Stock, provided that in the event Interprise elects to
terminate its commitment hereunder, notice of such election shall be made by
Interprise in writing and delivered to the Company within fifteen (15) days
after Interprise has purchased a total of $1,500,000 of the Company's Preferred
Stock, whether pursuant to this Agreement or otherwise. Notwithstanding the
foregoing, the option granted to Interprise pursuant to Section 1B(iii) shall
remain in full force and effect.
SECTION 2. CONDITIONS OF THE PURCHASERS' OBLIGATIONS.
2A. CONDITIONS TO INITIAL CLOSING. The obligation of the
Purchasers to purchase and pay for the Preferred Stock at the Initial Closing is
subject to the satisfaction as of the Initial Closing of the following
conditions:
(i) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties contained in Section 5 hereof shall be true and
correct at and as of the Initial Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein, and
the Company shall have performed all of the covenants required to be performed
by it hereunder prior to the Initial Closing.
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(ii) Articles OF INCORPORATION; BYLAWS. The Company's articles
of incorporation, together will all amendments thereto, the Certificate of
Designation, and any other certificates of designation or other similar
documents or instruments filed with the Secretary of State of Nevada
(collectively, the "ARTICLES OF INCORPORATION") shall be in form and substance
set forth in Exhibit A-2 hereto, shall be in full force and effect under the
laws of Nevada as of the Initial Closing and shall not have been amended or
modified. The Company's bylaws (the "BYLAWS") shall be in form and substance set
forth in Exhibit A-3 hereto, shall be in full force and effect under the laws of
Nevada as of the Initial Closing, and shall not have been amended or modified.
(iii) REGISTRATION AGREEMENT. The Company and the Purchasers
shall have entered into a registration rights agreement in form and substance
set forth in Exhibit B attached hereto (the "REGISTRATION AGREEMENT"), the
Registration Agreement shall not have been amended or modified, and shall be in
full force and effect as of the Initial Closing.
(iv) CONSENTS AND APPROVALS. The Company shall have received
or obtained all third-party and governmental and regulatory consents and
approvals necessary for the consummation of the transactions contemplated
hereby.
(v) COMPLIANCE WITH APPLICABLE LAWS. The sale of Preferred
Stock to the Purchasers hereunder shall not be prohibited by any applicable law
or governmental regulation, and shall be permitted by laws and regulations of
the jurisdictions to which the Company is subject.
(vi) FEES AND EXPENSES. The Company shall have reimbursed
Interprise for its fees and expenses as provided in Section 7A hereof.
(vii) INITIAL CLOSING DOCUMENTS. The Company shall have
delivered to Interprise all of the following documents:
(a) an Officer's Certificate, dated the date
of the Initial Closing, stating that the conditions specified
in Sections 2A(ii) through 2A(vi), inclusive, have been fully
satisfied;
(b) certified copies of the resolutions duly
adopted by the Company's board of directors (its "BOARD")
authorizing the execution, delivery, and performance of this
Agreement, the Registration Agreement, and each of the other
agreements contemplated hereby, the filing of the Certificate
of Designation referred to in Section 1A, the issuance and
sale of the Preferred Stock and the consummation of all other
transactions contemplated by this Agreement;
(c) certified copies of (1) the Certificate
of Designation; (2) the Articles of Incorporation; and (3) the
Company's Bylaws, each as in effect at the Initial Closing;
and
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(d) such other documents relating to the
transactions contemplated hereby as Interprise or its counsel
may reasonably request.
Any condition specified in this Section 2 may be waived only if such waiver is
set forth in a writing executed by Interprise.
SECTION 3. COVENANTS. As an inducement to enter into the
transactions contemplated by this Agreement, the Company hereby covenants to
undertake the obligations set forth in this Section 3. The covenants set forth
in Sections 3A through 3D below, shall, however, terminate upon the consummation
of a Qualified Public Offering.
3A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
shall deliver to Interprise, each holder of at least fifteen percent (15%) of
the Purchaser Preferred and each holder of at least fifteen percent (15%) of the
Purchaser Common:
(i) as soon as available but in any event within (a) sixty
(60) days after the end of the Company's quarterly accounting periods ended
March 31, 1998 and June 30, 1999, and (b) thereafter, forty-five (45) days after
the end of each quarterly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and for the period from
the beginning of the fiscal year to the end of such quarter, and consolidating
and consolidated balance sheets of the Company and its Subsidiaries as of the
end of such quarterly period, all prepared in accordance with generally accepted
accounting principles, consistently applied, subject to the absence of footnote
disclosures and to normal year-end adjustments;
(ii) accompanying the financial statements referred to in
Section 3A(i), an Officer's Certificate stating that neither the Company nor any
of its Subsidiaries is in default under any of its other material agreements or,
if any such default exists, specifying the nature and period of existence
thereof and what actions the Company and its Subsidiaries have taken and propose
to take with respect thereto;
(iii) within ninety (90) days after the end of each fiscal
year, consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such fiscal year, setting forth in each case comparisons to the annual budget
and to the preceding fiscal year, all prepared in accordance with generally
accepted accounting principles, consistently applied, and accompanied by: (a)
with respect to the consolidated portions of such statements (except with
respect to budget data), an opinion containing no exceptions or qualifications
(except for qualifications regarding specified contingent liabilities) of an
independent accounting firm of recognized standing reasonably acceptable to
Interprise; and (b) a copy of such firm's annual management letter to the Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant aspects
of the Company's operations or financial affairs given to the Company by its
independent accountants (and not otherwise contained in other materials provided
hereunder);
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(v) at least thirty (30) days before the beginning of each
fiscal year, an annual budget prepared on a monthly basis for the Company and
its Subsidiaries for such fiscal year (displaying anticipated statements of
income and cash flows), and promptly upon preparation thereof any other
significant budgets prepared by the Company and any revisions of such annual or
other budgets, and within thirty (30) days after any monthly period in which
there is a material adverse deviation from the annual budget, an Officer's
Certificate explaining the deviation and what actions the Company has taken and
proposes to take with respect thereto;
(vi) promptly (but in any event within five (5) business days)
after the discovery or receipt of notice of any default under any material
agreement to which the Company or any of its Subsidiaries is a party or any
other event or circumstance affecting the Company or any of its Subsidiaries
which is reasonably likely to have a material adverse effect on the financial
condition, operating results, assets, operations, or business prospects of the
Company or any of its Subsidiaries (including the filing of any material
litigation against the Company or any of its Subsidiaries or the existence of
any material dispute with any Person which involves a reasonable likelihood of
such litigation being commenced), an Officer's Certificate specifying the nature
and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto; and
(vii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this Section 3A may reasonably request.
Each of the financial statements referred to in Sections 3A(i) and (iii) shall
be consistent with the books and records of the Company (which in turn shall be
accurate and complete in all respects) and in accordance with GAAP applied on a
consistent basis shall present fairly the financial condition and results of
operation of the Company and its Subsidiaries as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end audit adjustments (none of
which would, alone or in the aggregate, be materially adverse to the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole).
3B. INSPECTION OF PROPERTY. The Company shall permit
Interprise, each holder of at least fifteen percent (15%) of the Purchaser
Common, and each holder of at least fifteen percent (15%) of the Purchaser
Preferred, or the representatives of any such Person, upon reasonable notice and
during normal business hours and such other times as any such holder may
reasonably request, to: (i) visit and inspect any of the properties of the
Company and its Subsidiaries; (ii) examine the corporate and financial records
of the Company and its Subsidiaries and make copies thereof or extracts
therefrom; and (iii) discuss the affairs, finances, and accounts of any such
corporations with the directors, officers, key employees, and independent
accountants of the Company and its Subsidiaries; provided that the Company shall
have the right to have its chief financial officer present at any meetings with
the Company's independent accountants.
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3C. RESTRICTIONS. Without the prior written consent of
Interprise, the Company shall not and shall not commit to:
(i) directly or indirectly declare or pay any dividends or
make any distributions upon any of its equity securities, other than payments of
dividends on, or redemption payments in respect of, the Preferred Stock pursuant
to the Articles of Incorporation;
(ii) except pursuant to this Agreement, directly or indirectly
redeem, purchase, or otherwise acquire, or permit any of its Subsidiaries to
redeem, purchase, or otherwise acquire, any of the Company's or any Subsidiary's
equity securities (including, without limitation, warrants, options, and other
rights to acquire equity securities);
(iii) except as expressly contemplated by this Agreement,
authorize, issue, sell, or enter into any agreement providing for the issuance
(contingent or otherwise), or permit any of its Subsidiaries to authorize,
issue, sell, or enter into any agreement providing for the issuance (contingent
or otherwise) of any equity securities or debt securities with equity features
or securities exercisable or convertible into equity securities or debt
securities with equity features;
(iv) merge or consolidate with any Person or permit any of its
Subsidiaries to merge or consolidate with any Person (other than a wholly owned
Subsidiary);
(v) sell, lease, or otherwise dispose of, or permit any of its
Subsidiaries to sell, lease, or otherwise dispose of, more than ten percent
(10%) of the consolidated assets of the Company and its Subsidiaries (computed
on the basis of book value, determined in accordance with generally accepted
accounting principles consistently applied, or fair market value, determined by
the Board in its reasonable good faith judgment) in any transaction or series of
related transactions (other than sales of inventory in the ordinary course of
business);
(vi) liquidate, dissolve, or effect, or permit any of its
Subsidiaries to liquidate, dissolve, or effect, a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into partnership form);
(vii) acquire, or permit any of its Subsidiaries to acquire,
any interest in any business (whether by a purchase of assets, purchase of
stock, merger, or otherwise), or enter into any joint venture, in excess of
$100,000;
(viii) enter into, or permit any of its Subsidiaries to enter
into, the ownership, active management, or operation of any business that is
materially different from the businesses in which the Company and its
Subsidiaries were engaged on the date of this Agreement;
(ix) enter into, amend, modify, or supplement or permit any of
its Subsidiaries to enter into, amend, modify, or supplement any agreement,
transaction, commitment, or arrangement with any of its or any of its
Subsidiaries' officers, directors, or senior executive employees;
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(x) create, incur, assume, or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume, or suffer to exist, Indebtedness
or other non-ordinary course liabilities exceeding the amounts approved therefor
by the Board in the annual budget;
(xi) make, or permit any of its Subsidiaries to make, any
loans or advances to, guarantees for the benefit of, or Investments in, any
Person (other than a wholly-owned Subsidiary), except for: (a) reasonable
advances to employees in the ordinary course of business; and (b) Investments
having a stated maturity no greater than one year from the date the Company
makes such Investment in (1) obligations of the United States government or any
agency thereof or obligations guaranteed by the United States government, (2)
certificates of deposit of commercial banks having combined capital and surplus
of at least $50 million or (3) commercial paper with a rating of at least
"Prime-1" by Moody's Investors Service, Inc.;
(xii) except as expressly contemplated by this Agreement, make
any amendment to the Articles of Incorporation or the Company's bylaws, or file
any resolution of the Board or certificate of designation with the Secretary of
State of Nevada;
(xiii) make any capital expenditures (including, without
limitation, payments with respect to capitalized leases, as determined in
accordance with generally accepted accounting principles consistently applied)
exceeding $100,000, except as permitted by any budget approved by the Board;
(xiv) hire, terminate, suspend, promote or demote any senior
executive employee of the Company or any of its Subsidiaries;
(XV) enter into, or cause any Subsidiary to enter into, any
agreement which would (under any circumstances) restrict the Company's or any of
its Subsidiaries' right or ability to perform the provisions of this Agreement
or any of the other agreements or instruments contemplated hereby or to conduct
its business as currently conducted or as proposed to be conducted at any time;
or
(xvi) approve any business plan or annual budget of the
Company or any of its Subsidiaries for any fiscal year.
3D. AFFIRMATIVE COVENANTS. Unless the Company obtains the
prior written consent of Interprise, the Company shall, and shall cause each
Subsidiary to:
(i) comply with all applicable laws, rules, and regulations of
all governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations, or business prospects of the Company and
its Subsidiaries taken as a whole, and pay and discharge when payable all Taxes,
assessments, and governmental charges (except to the extent the same are being
contested in good faith and adequate reserves therefor have been established);
(ii) enter into and maintain appropriate non-disclosure,
noncompete, and non-solicitation agreements with its key employees; and
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(iii) cause any agreement entered into by the Company or any
Subsidiary after the date hereof which provides for the sale of capital stock of
the Company (or the capital stock of any Subsidiary of the Company) to, or
employment of, a senior management to be in form and substance substantially
similar to the draft of such agreement reviewed and approved by Interprise.
3E. CURRENT PUBLIC INFORMATION. At all times after the Company
has filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable: (i) such holders
to sell Restricted Securities pursuant to Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission; or (ii) the Company to be eligible to
register its securities pursuant to a registration statement on Form S-2 or S-3
or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements. Until such time as the Company has filed a registration
statement with the Securities and Exchange Commission pursuant to the
requirements of either the Securities Act or the Securities Exchange Act, the
Company shall file all reports required to be filed by it by the National
Association of Securities Dealers, Inc., or any affiliate thereof (the "NASD"),
and shall comply with all rules and requirements of the NASD which are
applicable to the Company, and shall Comply with all rules and regulations
adopted by the Securities and Exchange Commission which apply to the Company's
current status as a "publicly traded company" on the NASD "bulletin board"
system.
3F. LIMITED PREEMPTIVE RIGHTS.
(i) Except for the issuance of Stock or any securities
containing options or rights to acquire any shares of Stock: (a) to employees,
consultants, officers, or directors of the Company or an Affiliate thereof
pursuant to arrangements approved by the Board; (b) in connection with
acquisitions approved by the Board; (c) in connection with financing
transactions approved by the Board; or (d) pursuant to a public offering
registered under the Securities Act, if the Company at any time after the
Initial Closing and prior to the consummation of the earlier of a Sale of the
Company or Qualified Public Offering authorizes the issuance or sale of any
shares of any class of capital stock or any securities containing options or
rights to acquire any shares of any class of capital stock ("OPTIONS") (other
than as a dividend or distribution on outstanding shares of capital stock), then
the Company shall first offer to sell to each holder of Purchaser Stock a
portion of such capital stock or Options equal to the quotient determined by
dividing (1) the number of shares of Purchaser Common assuming the Preferred
Stock held by such holder were converted by (2) the total number of shares of
Common Stock outstanding immediately before such issuance assuming all shares of
Preferred Stock were converted. Each holder of Purchaser Stock shall be entitled
to purchase all or any
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portion of such capital stock or Options at the most favorable price and on the
most favorable terms as such capital stock or Options are to be offered to any
other Persons.
(ii) In order to exercise its purchase rights hereunder, a
holder of Purchaser Stock must within fifteen (15) days after receipt of written
notice from the Company describing in reasonable detail the stock or securities
being offered, the purchase price thereof, the payment terms, and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder. If all of the capital stock and Options offered to the
holders of Purchaser Stock is not fully subscribed by such holders, then the
remaining stock and securities shall be reoffered by the Company to the holders
purchasing their full allotment upon the terms set forth in this paragraph,
except that such holders must exercise their purchase rights within five (5)
days after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described
above, the Company shall be entitled to sell such stock or securities which the
holders of Purchaser Stock have not elected to purchase during the ninety (90)
days following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such ninety (90) day period must be
reoffered to the holders of Purchaser Stock pursuant to the terms of this
paragraph.
(iv) Nothing contained in this paragraph 3F shall be deemed to
amend, modify, or limit in any way the restrictions on the issuance of shares of
stock set forth in paragraph 3C hereof or elsewhere in this Agreement, in the
Articles of Incorporation, or in any other agreement to which the Company is
bound.
3G. PUBLIC DISCLOSURES. The Company shall not, nor shall it
permit any of its Subsidiaries or other Affiliates to, disclose Interprise's (or
its Affiliates') name or identity as an investor in the Company in any press
release or other public announcement or in any document or material filed with
any governmental entity, without the prior written consent of Interprise, unless
such disclosure is required by applicable law or governmental regulations or by
order of a court of competent jurisdiction, in which case, before making such
disclosure the Company shall give written notice to Interprise describing in
reasonable detail the proposed content of such disclosure and shall permit
Interprise to review and comment upon the form and substance of such disclosure.
3H. HART-SCOTT-RODINO COMPLIANCE. In connection with any
transaction in which the Company, or any Subsidiary is involved which is
required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended from time to time (the "HSR ACT"), the Company, or any such
Subsidiary, shall prepare and file all documents with the Federal Trade
Commission and the United States Department of Justice which may be required to
comply with the HSR Act, and shall promptly furnish all materials thereafter
requested by any of the regulatory agencies having jurisdiction over such
filings, in connection with the transactions contemplated thereby. The Company,
or any such Subsidiary, shall take all reasonable actions and shall file and use
reasonable best efforts to have declared effective or approved all documents and
notifications with any governmental or regulatory bodies, as may be
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necessary or may reasonably be requested under federal antitrust laws for the
consummation of the subject transaction.
SECTION 4. TRANSFER OF RESTRICTED SECURITIES. Each Purchaser
acknowledges that the Restricted Securities are transferable only pursuant to:
(a) public offerings registered under the Securities Act; (b) Rule 144 or Rule
144A of the Securities and Exchange Commission (or any similar rule or rules
then in force) if such rule or rules are available; and (c) any other legally
available means of transfer. In connection with the transfer of any Restricted
Securities (other than a transfer described in clauses (a) or (b) above), the
holder thereof shall deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer. In addition, upon the
request of Interprise, the Company shall promptly supply to Interprise or its
prospective transferees all information regarding the Company required to be
delivered in connection with a transfer pursuant to Rule 144A of the Securities
and Exchange Commission.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Purchasers to enter into this Agreement and purchase
the Stock, the Company hereby represents and warrants to the Purchasers that,
except as expressly set forth on the Schedule of Exceptions attached hereto:
5A. ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of Nevada and is qualified to do business in every jurisdiction in which
the failure to so qualify might reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets,
operations, or business prospects of the Company and its Subsidiaries taken as a
whole. The Company has all requisite corporate power and authority and all
material licenses, permits, and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted, and to carry out the transactions contemplated by this
Agreement. The copies of the Company's Articles of Incorporation and Bylaws, and
the copies of the articles of incorporation and bylaws (or other similar
organizational documents) of each Subsidiary of the Company, which have been
furnished to Interprise's counsel, reflect all amendments made thereto at any
time before the Applicable Date and are correct and complete.
5B. CAPITAL STOCK AND RELATED MATTERS.
(i) The authorized capital stock of the Company consists of
100,000,000 shares of capital stock, of which 10,000,000 shares are designated
as Class A Convertible Preferred Stock, par value $.001 per share and of which
90,000,000 shares are designated as Common Stock par value $.001 per share.
Immediately prior to the Initial Closing, the Company had 15,185,000 shares of
Common Stock issued and outstanding. Except for such issued and outstanding
shares, the Company does not have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock or containing
any profit participation features, nor does it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans other than pursuant to, and as
contemplated by, this Agreement. The Company is not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options,
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or other rights to acquire its capital stock, except pursuant to this Agreement.
All of the outstanding shares of the Company's capital stock are and shall be
validly issued, fully paid, and nonassessable.
(ii) There are no statutory or contractual stockholders
preemptive rights or rights of refusal with respect to the issuance of any of
the Stock hereunder, except as expressly provided herein. Based in part on the
investment representations of the Purchasers in Section 7C hereof, the Company
has not violated any applicable federal or state securities laws in connection
with the offer, sale, or issuance of any of its capital stock, and the offer,
sale, and issuance of the Stock hereunder does not and will not require
registration under the Securities Act or any applicable state securities laws.
There are no agreements between the Company's stockholders with respect to the
voting or transfer of the Company's capital stock or with respect to any other
aspect of the Company's affairs.
5C. AUTHORIZATION; NO BREACH. The execution, delivery, and
performance of this Agreement, the Registration Agreement, and all other
agreements contemplated hereby to which the Company is from time to time a party
and the filing of the Articles of Incorporation and the filing of the
Certificate of Designation have been duly authorized by the Company. This
Agreement, the Registration Agreement, the Certificate of Designation, the
Articles of Incorporation, and all other agreements contemplated hereby from
time to time to which the Company or any Subsidiary is a party each constitutes
a valid and binding obligation of such Person, enforceable in accordance with
its terms. The execution and delivery by the Company of this Agreement, the
Registration Agreement, and all other agreements contemplated hereby to which
the Company is a party, the offering, sale, and issuance of the Stock hereunder,
the Certificate of Designation, the Articles of Incorporation and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company do not and will not: (i) conflict with or result in a breach of the
terms, conditions, or provisions of; (ii) constitute a default under; (iii)
result in the creation of any Lien, security interest, charge, or encumbrance
upon the Company's capital stock or assets pursuant to; (iv) give any third
party the right to modify, terminate, or accelerate any obligation under; (v)
result in a violation of; or (vi) require any authorization, consent, approval,
exemption, or other action by or notice to any court or administrative or
governmental body pursuant to, the Articles of Incorporation or Bylaws of the
Company, or any law, statute, rule, or regulation to which the Company is
subject, or any agreement, instrument, order, judgment, or decree to which the
Company or any of its Affiliates, or employees is a party or by which it or any
of the foregoing Persons is bound.
5D. SUBSIDIARIES; INVESTMENTS. The Company does not own or
hold any shares of stock or any other security or interest in any other Person
or any rights to acquire any such security or interest, and the Company has
never had any Subsidiary.
5E. CONDUCT OF BUSINESS; LIABILITIES. Other than the
negotiation, execution and delivery of this Agreement, the Registration
Agreement and the other agreements contemplated hereby and thereby, and except
as has been disclosed or made available to Interprise, prior to the Closing, the
Company has not: (i) conducted any business; (ii) incurred any material
expenses, obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company and whether due
or to become
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due and regardless of when asserted); (iii) owned any material assets; (iv)
entered into any material contracts or agreements; or (v) violated any laws or
governmental rules or regulations.
5F. TAX MATTERS. The Company has filed all tax returns (if
any) which it is required to file under applicable laws and regulations; all
such returns are complete and correct in all material respects; the Company has
paid all taxes due and owing by it and has withheld and paid over all taxes
which it is obligated to withhold from amounts paid or owing to any employee,
stockholder, creditor or other third party; the Company has not waived any
statute of limitations with respect to taxes or agreed to any extension of time
with respect to a tax assessment or deficiency; the assessment of any additional
taxes for periods for which returns have been filed is not expected; no foreign,
federal, state or local tax audits are pending or being conducted with respect
to the Company, no information related to tax matters has been requested by any
foreign, federal, state or local taxing authority and no notice indicating an
intent to open an audit or other review has been received by the Company from
any foreign, federal, state or local taxing authority; and there are no
unresolved questions or claims concerning the Company's tax liability. The
Company has not made an election under ss.341(f) of the IRC.
5G. LITIGATION, ETC. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the best of the Company's
knowledge, threatened against or affecting the Company (or to the best of the
Company's knowledge, pending or threatened against or affecting any of the
officers, directors or employees of the Company with respect to their business
or proposed business activities) at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitations, any actions, suits, proceedings or
investigations with respect to the transactions contemplated by this Agreement)
which could have a material adverse effect on the financial condition, operating
results, assets, operations or business prospects of the Company taken as a
whole; the Company is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of the Company's
knowledge, any governmental investigations or inquiries; and, to the best of the
Company's knowledge, there is no basis for any of the foregoing. The Company is
not subject to any judgment, order or decree of any court or other governmental
agency. The Company has not received any opinion or memorandum or legal advice
from legal counsel to the effect that it is exposed, from a legal standpoint, to
any liability or disadvantage which may be material to its business.
5H. BROKERAGE. There are no claims for brokerage commissions,
finders, fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company. The Company shall pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorneys fees and out-of-pocket expenses) arising in connection with any such
claim.
5I. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby.
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<PAGE> 16
5J. ERISA. The Company does not maintain or have any
obligation to contribute to or any other liability with respect to or under
(including but not limited to current or potential withdrawal, liability), nor
has it ever maintained or had any obligation to contribute to or any other
liability with respect to or under: (i) any plan or arrangement whether or not
terminated, which provides medical, health, life insurance or other welfare
types benefits for current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under Section
4980B of the IRC or as required under applicable state law); (ii) any
"mutliemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"); (iii) any employee plan which
is a tax-qualified "defined benefit plan" (as defined in Section 3(35) of
ERISA), whether or not terminated; (iv) any employee plan which is tax-qualified
"defined contribution plan" (as defined in Section 3(34) of ERISA), whether or
not terminated; or (v) any other plan or arrangement providing benefits to
current or former employees, including any bonus plan, plan for deferred
compensation, employee health or other welfare benefit plan or other
arrangement, whether or not terminated. For purposes of this Section 5J, the
term "Company" includes all organizations under common control with the Company
pursuant to Section 414(b) or (c) of the IRC.
5K. COMPLIANCE WITH LAWS. The Company has not violated any law
or any governmental regulation or requirement which violation would reasonably
be expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company, and
the Company has not received notice of any such violation. The Company is not
subject to any clean up liability, and the Company has no reason to believe it
may become subject to any clean up liability, under any federal, state or local
environmental law, rule or regulation.
5L. DISCLOSURE. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to the Purchasers by or on behalf of the Company with
respect to the transactions contemplated hereby contain any untrue statement of
a material fact or omit a material fact necessary to make each statement
contained herein or therein not misleading. There is no fact which the Company
has not disclosed to the Purchasers in writing and of which any of its officers,
directors or executive employees is aware and which has had or might reasonably
be anticipated to have a material adverse effect upon the existing or expected
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Company.
5M. CLOSING DATE. The representations and warranties of the
Company contained in this Section 5 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
writing delivered by, or on behalf of, the Company to the Purchasers shall be
true and correct in all respects on the date of the Closing as though then made,
except as affected by the transactions expressly contemplated by this Agreement.
SECTION 6. DEFINITIONS. For the purposes of this Agreement,
the following terms have the meanings set forth below:
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"AFFILIATE" of any particular person or entity means any other
person or entity controlling, controlled by, or under common control with such
particular person or entity.
"AFFILIATED GROUP" means an affiliated group as defined in
Section 1504 of the IRC (or any analogous combined, consolidated, or unitary
group defined under state, local, or foreign income Tax law).
"COMMON STOCK" means the Company's common stock, par value
$0.001 per share.
"INDEBTEDNESS" means all indebtedness for borrowed money
(including purchase money obligations), all indebtedness under revolving credit
arrangements, all capitalized lease obligations, and all guarantees of any of
the foregoing, involving any amount or amounts in excess of $100,000.
"INVESTMENT" as applied to any Person means: (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities, or ownership interest (including partnership
interests and joint venture interests of any other Person, and; (ii) any capital
contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company, any of its
Subsidiaries or any of its Affiliates, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect owner-ship by a third party of property leased to
the Company or any of its Subsidiaries under a lease which is not in the nature
of a conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person (other than any subordination arising in
the ordinary course of business).
"OFFICER'S CERTIFICATE" means a certificate signed by the
Company's President or its Chief Financial Officer, stating that: (i) the
officer signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy of
the information set forth in such certificate; and (ii) such certificate does
not misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, and a governmental
entity or any department, agency, or political subdivision thereof.
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<PAGE> 18
"PREFERRED STOCK" means the Company's Class A Convertible
Preferred Stock, par value $0.001 per share.
"PURCHASER COMMON" means: (i) the Common Stock issued to
Purchasers upon the conversion of the Preferred Stock; and (ii) any capital
stock issued or issuable with respect to the Common Stock referred to in clause
(i) above by way of stock dividends or stock splits or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization. As to any particular shares of Purchaser Common, such shares
shall cease to be Purchaser Common when they have been: (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them; or (b) distributed to the public through a
broker, dealer, or market maker pursuant to Rule 144 under the Securities Act
(or any similar rule then in force).
"PURCHASER PREFERRED" means (i) the Preferred Stock issued to
Purchasers hereunder; and (ii) any capital stock issued or issuable with respect
to the Preferred Stock referred to in clause (i) above by way of stock dividends
or stock splits or in connection with a combination of shares, recapitalization,
merger, consolidation, or other reorganization. As to any particular shares of
Purchaser Preferred, such shares shall cease to be Purchaser Preferred when they
have been: (a) converted into Common Stock; (b) redeemed by the Company; (c)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them; or (d) distributed to the public
through a broker, dealer, or market maker pursuant to Rule 144 under the
Securities Act (or any similar rule then in force).
"PURCHASER STOCK" means the Purchaser Preferred and the
Purchaser Common.
"QUALIFIED PUBLIC OFFERING" means an underwritten public
offering of shares of Common Stock registered under the Securities Act in which
the aggregate price paid by the public for such shares is at least $15 million.
For purposes of this Agreement, a Qualified Public Offering shall be deemed to
have occurred upon the effectiveness of the registration statement filed with
respect to such offering, subject to any consequences under this Agreement of
such Qualified Public Offering having been deemed to have occurred being
reversed and nullified if the closing of the sale of such shares pursuant to
such offering does not occur within ten business days after such effectiveness.
"RESTRICTED SECURITIES" means: (i) the Stock issued hereunder;
and (ii) any securities issued with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
the conversion of stock, or in connection with combination of shares,
recapitalization, merger, consolidation, or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be Restricted
Securities when they have: (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them;
(b) become eligible for sale pursuant to Rule 144(k) (or any similar provision
then in force) under the Securities Act; or (c) been otherwise transferred and
new certificates for them not bearing the Securities Act legend set forth in
Section 7C have been delivered by the Company in accordance with Section 7C.
Whenever any particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the
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Company, without expense, new securities of like tenor not bearing a Securities
Act legend of the character set forth in Section 7C.
"SALE OF THE COMPANY" means: (i) any sale, transfer, or
issuance or series of sales, transfers, and/or issuances of capital stock of the
Company by the Company or any holders thereof which results in any Person or
group of Persons (as the term "group" is used under the Securities Exchange
Act), other than the holders of Common Stock and Preferred Stock as of the
Initial Closing, owning capital stock of the Company possessing the voting power
(under ordinary circumstances) to elect a majority of the Board; and (ii) any
sale or transfer of all or substantially all of the assets of the Company and
its Subsidiaries in any transaction or series of transactions (other than sales
in the ordinary course of business).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental
body or agency succeeding to the functions thereof.
"STOCK" means the Company's Preferred Stock and Common Stock.
"SUBSIDIARY" means, with respect to any Person, any
corporation, limited liability company, partnership, association, or other
business entity of which: (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof;
or (ii) if a limited liability company, partnership, association, or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association, or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association, or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association, or other business
entity. References to a "SUBSIDIARY" of the Company shall be given effect only
at such times as the Company has one or more Subsidiaries.
"TAX" OR "TAXES" means any: (i) federal, state, local, or
foreign income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties, or additions to tax or
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additional amounts in respect of the foregoing; (ii) liability of the Company
for the payment of any amounts of the type described in clause (i) arising as a
result of being (or ceasing to be) a member of any Affiliated Group (or being
included (or required to be included) in any Tax Return relating thereto); and
(iii) liability of the Company for the payment of any amounts of the type
described in clause (i) as a result of any express or implied obligation to
indemnify or otherwise assume or succeed to the liability of any other person
(including, but not limited to, as a successor or transferee).
"TAX RETURNS" means returns, declarations, reports, claims for
refund, information returns, or other documents (including any related or
supporting schedules, statements, or information) filed or required to be filed
in connection with the determination, assessment, or collection of Taxes of any
party or the administration of any laws, regulations, or administrative
requirements relating to any Taxes.
SECTION 7. MISCELLANEOUS.
7A. EXPENSES. As a further inducement for the Purchasers to
consummate the transactions contemplated hereby, the Company agrees to pay to
Interprise a closing fee, payable as follows: (a) $15,000 at the Initial
Closing; and (b) $65,000 payable at such time as the Purchasers have purchased a
total of at least $1,500,000 in Preferred Stock. In addition, the Company shall
reimburse Interprise for its reasonable fees and expenses (including its
reasonable fees and expenses of its counsel and other advisors) which Interprise
has incurred in connection with the Initial Closing. In addition, the Company
agrees to pay, and hold each of Interprise and the other holders of Purchaser
Stock harmless against liability for the payment of: (i) its reasonable fees and
expenses (including its reasonable fees and expenses of its counsel and other
advisors) arising in connection with the interpretation and enforcement of its
rights under, this Agreement, the Registration Agreement, the other agreements
contemplated hereby and thereby, the Articles of Incorporation and the Company's
Bylaws, and the consummation of the transactions contemplated hereby and thereby
(including, but not limited to, reasonable fees and expenses arising with
respect to any subsequent purchase of Stock pursuant to Section 1B hereof and
any subsequent or proposed acquisitions, sales, mergers, or recapitalizations by
the Company and its Subsidiaries); (ii) the reasonable fees and expenses
incurred with respect to any amendments or waivers (whether or not the same
become effective) under or in respect of this Agreement, the Registration
Agreement, the other agreements contemplated hereby, and thereby and the
Articles of Incorporation and the Company's Bylaws; (iii) reasonable travel
expenses and other reasonable out-of-pocket fees and expenses as have been or
may be incurred by Interprise, its directors, officers and employees in
connection with the transactions contemplated hereby (including, but not limited
to, reasonable fees and expenses incurred in attending Company-related
meetings); and (iv) stamp and other Taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance, delivery, or
acquisition of any shares of Stock purchased hereunder or in accordance with
Section 1B hereof.
7B. REMEDIES. Each holder of Stock issued hereunder shall have
all rights and remedies set forth in this Agreement and the Articles of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any Person having any rights under any
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provision of this Agreement shall be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law.
7C. PURCHASERS' INVESTMENT REPRESENTATIONS. Each Purchaser
hereby represents that such Purchaser is acquiring the Restricted Securities
purchased hereunder or acquired pursuant hereto for its own account with the
present intention of holding such securities for purposes of investment, and
that it has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws; provided that nothing contained herein shall prevent such Purchaser and
subsequent holders of Restricted Securities from transferring such securities in
compliance with the provisions of Section 4 hereof.
Each certificate for Restricted Securities shall be imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON MARCH __, 1999, AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK PURCHASE
AGREEMENT, DATED AS OF MARCH___, 1999, BETWEEN THE ISSUER (THE
"COMPANY") AND CERTAIN INVESTORS, AND THE COMPANY RESERVES THE
RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER.
A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
If the holder of the Restricted Securities delivers to the Company an
opinion of qualified securities counsel reasonably acceptable to the Company
that no subsequent transfer of such Restricted Securities shall require
registration under the Securities Act, however, the Company shall promptly upon
such contemplated transfer deliver new certificates for such Restricted
Securities which do not bear the Securities Act legend set forth in this Section
7C.
7D. CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if and when the Company has obtained the written
consent of Interprise, unless or until Interprise no longer has any rights under
this Agreement, at which time the Company need only obtain the written consent
of a successor to the rights and obligations of Interprise. No other course of
dealing between the Company and the holder of any Stock or any delay in
exercising any rights hereunder or under the Articles of Incorporation shall
operate as a waiver of any rights of any
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such holders. For purposes of this Agreement, shares of Stock held by the
Company or any Subsidiaries shall not be deemed to be outstanding.
7E. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, regardless of any investigation made by any Purchaser or on its
behalf.
7F. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so expressed
or not; provided that this Agreement may not be assigned by the Company without
the consent of Interprise. In addition, and whether or not any express
assignment has been made, the provisions of this Agreement which are for a
Purchaser's benefit as a purchaser or holder of Stock are also for the benefit
of, and enforceable by, any subsequent holder of such Stock. The rights and
obligations of Interprise under this Agreement and the agreements contemplated
hereby may be assigned by Interprise at any time, in whole or in part, to any
investment fund managed by Miller Technology Management, L.P. or its Affiliates,
or any successor thereto.
7G. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Where any
accounting determination or calculation is required to be made under this
Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with generally accepted
accounting principles, consistently applied, except that, if because of a change
in generally accepted accounting principles the Company would have to alter a
previously utilized accounting method or policy in order to remain in compliance
with generally accepted accounting principles, then such determination or
calculation shall continue to be made in accordance with the Company's previous
accounting methods and policies. All numbers set forth herein which refer to
share prices or numbers or amount will be appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares, and other
recapitalizations affecting the subject class of stock.
7H. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, then such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
7I. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.
7J. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. Whenever required by the
context, any pronoun used in this Agreement shall
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include the corresponding masculine, feminine, or neuter forms, and the
singular form of nouns, pronouns, and verbs shall include the plural and vice
versa. The use of the word "INCLUDING" in this Agreement shall be by way of
example rather than by limitation. Reference to any agreement, document, or
instrument means such agreement, document, or instrument as amended or otherwise
modified from time to time in accordance with the terms thereof, and if
applicable hereof. Without limiting the generality of the immediately preceding
sentence, no amendment or other modification to any agreement, document, or
instrument that requires the consent of any Person pursuant to the terms of this
Agreement or any other agreement will be given effect hereunder unless such
Person has consented in writing to such amendment or modification.
7K. GOVERNING LAW. The corporate law of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, and interpretation of
this Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
7L. NOTICES. All notices, demands, or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, upon machine-generated acknowledgment of receipt
after transmittal by facsimile, sent to the recipient by reputable express
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested, and postage prepaid. Such notices,
demands, and other communications shall be sent to the Purchasers and to the
Company at the address indicated below:
If to the Company:
World Commerce Online, Inc.
9675 Tradeport Drive
Orlando, FL 32827
Attention: Robert Shaw
Facsimile: (407) 240-9228
with a copy (which shall not constitute notice) to:
Greenberg Traurig, P.A.
111 North Orange Avenue
Orlando, FL 32801
Attention: Tucker H. Byrd
Facsimile: (407) 420-5909
-20-
<PAGE> 24
If to any Purchaser:
c/o Miller Capital Management, Inc.
1001 Brickell Bay Drive
30th Floor
Miami, FL 33131
Attention: David R. Parker
Facsimile: (305) 374-3317
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: David L. Kaye
Facsimile: (202) 637-5910
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
7M. RIGHTS. This Agreement shall not confer any rights or
remedies upon any Person, other than the parties hereto and their respective
heirs, successors, and permitted assigns.
7N. AMENDMENTS. Any reference contained herein to any
agreement, instrument, or other document shall include any amendments or
modifications made to such agreement, instrument, or other document made from
time to time in accordance with the terms thereof, and if applicable, hereof.
7O. SEVERAL OBLIGATIONS. The obligations of the Purchasers
hereunder shall be several obligations, and not joint and several obligations.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-21-
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement on the date first written above.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
--------------------------------------
Robert Shaw
Chairman and Chief Executive Officer
INTERPRISE TECHNOLOGY PARTNERS, L.P.
By: /s/ David R. Parker
--------------------------------------
David R. Parker
Managing Principal
-22-
<PAGE> 26
================================================================================
PURCHASE SCHEDULE
================================================================================
This Purchase Schedule relates to that certain Stock Purchase Agreement (the
"PURCHASE AGREEMENT"), dated as of March 30, 1999, by and between Interprise
Technology Partners, L.P. ("INTERPRISE") and World Commerce Online, Inc. (the
"COMPANY"), and sets forth the times at which Interprise will purchase certain
amounts of the Company's Class A Convertible Preferred Stock, par value $0.001
per share (the "PREFERRED STOCK"). Purchases of the Preferred Stock shall be
made subject to the terms and conditions set forth in the Purchase Agreement.
Numbers set forth in this Purchase Schedule shall be equitably adjusted for
subsequent stock splits, stock combinations, stock dividends and
recapitalizations.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
PREFERRED STOCK TO BE PURCHASED
DATE BY INTERPRISE
------------------------ --------------------------------
<S> <C>
April 1, 1999 200,000
May 3, 1999 225,000
June 1, 1999 250,000
July 1, 1999 250,000
August 2, 1999 250,000
September 1, 1999 250,000
October 1, 1999 through October 1, 2,325,000 shares of Preferred Stock, to be purchased
2000 at such times in such amounts as are mutually
agreeable to Interprise and the Company. The
schedule for such purchases shall be determined by
June 1, 1999, and this Purchase Schedule shall be
revised accordingly at such time and appended
to the Purchase Agreement.
</TABLE>
<PAGE> 27
================================================================================
SCHEDULE OF EXCEPTIONS
================================================================================
5D: SUBSIDIARY; INVESTMENTS.
World Commerce Online - Floraplex, Inc., a Florida corporation, is a
wholly-owned subsidiary of the Company.
5G: LITIGATION, ETC.
The following lawsuits and/or judgments remain outstanding against
World Commerce Online - Floraplex, Inc., f/k/a World Commerce Online, Inc., and
f/k/a The Floral Foundation, Inc.
1. VISBEEN FLORAL BV, vs. THE FLORAL FOUNDATION, INC., (Orange
County) - Trade credit claim for $20,993.93 through October
17, 1996 plus interest. Suit filed but no adjudication.
2. BLOOMX, INC., vs. THE FLORAL FOUNDATION, INC., (Dade County) -
Trade credit claim reduced to a judgment on February 10, 1997
in the amount of $42,000.00 plus interest. This claim has
already been substantially repaid.
3. AABLO BV AALSMEER, vs. THE FLORAL FOUNDATION, INC., (Orange
County) - Trade credit claim reduced to a judgment on March
14, 1997 in the amount of $10,728.62 plus interest.
4. HOLEX FLOWER BV, vs. THE FLORAL FOUNDATION, INC., (Orange
County) - Trade credit claim for $47,595.52 through December
31, 1997. Suit filed but no adjudication.
5. ARMELLINI EXPRESS LINES, INC., vs. WORLD COMMERCE ONLINE,
INC., f/k/a THE FLORAL FOUNDATION, INC., and WILLIAM A.
MOBLEY, (Dade County) - Trade credit claim reduced to a
judgement on August 24, 1998 in the amount of $1,837.89 plus
interest.
5J: ERISA.
Employee health insurance with United Healthcare of Florida, Inc., P.O.
Box 945200, Maitland, Florida 32794-5200. Account No. 156485, Plan 200C-PPO.
Currently the Company is paying the insurance premium for each of the employee's
and deducting from payroll for their spouses and children.
<PAGE> 1
EXHIBIT 3.5
================================================================================
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
WORLD COMMERCE ONLINE, INC.
AND
INTERPRISE TECHNOLOGY PARTNERS, L.P.
AND THE OTHER PARTIES LISTED HEREIN
NOVEMBER 11, 1999
================================================================================
<PAGE> 2
================================================================================
CONTENTS
================================================================================
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. Authorization and Closing..................................................................1
1A. Authorization of the Stock.................................................................1
1B. Purchase and Sale of the Stock.............................................................1
Section 2. Conditions of the Purchasers' Obligations..................................................2
2A. Conditions to Closing......................................................................2
Section 3. Covenants..................................................................................3
3A. Financial Statements and Other Information.................................................4
3B. Inspection of Property.....................................................................5
3C. Restrictions...............................................................................5
3D. Affirmative Covenants......................................................................7
3E. Current Public Information.................................................................8
3F. Limited Preemptive Rights..................................................................8
3G. Public Disclosures.........................................................................9
3H. Hart-Scott-Rodino Compliance...............................................................9
3I. Use of Proceeds............................................................................9
Section 4. Transfer of Restricted Securities..........................................................10
Section 5. Representations and Warranties of the Company..............................................10
5A. Organization and Corporate Power...........................................................10
5B. Capital Stock and Related Matters..........................................................11
5C. Authorization; No Breach...................................................................11
5D. Subsidiaries; Investments..................................................................12
5E. Conduct of Business; Liabilities...........................................................12
5F. Tax Matters................................................................................12
5G. Litigation, etc............................................................................13
5H. Brokerage..................................................................................13
5I. Governmental Consent, etc..................................................................13
5J. ERISA......................................................................................13
5K. Compliance with Laws.......................................................................14
5L. Merger with WCO-Nevada.....................................................................14
5M. Disclosure.................................................................................14
5N. Closing Date...............................................................................15
Section 6. Definitions................................................................................15
Section 7. Miscellaneous..............................................................................19
7A. Expenses...................................................................................19
7B. Remedies...................................................................................19
7C. Purchasers'Investment Representations......................................................19
7D. Consent to Amendments......................................................................20
7E. Survival of Representations and Warranties.................................................20
7F. Successors and Assigns.....................................................................21
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
7G. Generally Accepted Accounting Principles...................................................21
7H. Severability...............................................................................21
7I. Counterparts...............................................................................21
7J. Descriptive Headings; Interpretation.......................................................21
7K. Governing Law..............................................................................22
7L. Notices....................................................................................22
7M. Rights.....................................................................................23
7N. Amendments.................................................................................23
7O. Several Obligations........................................................................23
</TABLE>
LIST OF EXHIBITS AND SCHEDULES
Purchase Schedule
Schedule of Exceptions
Schedule 2A(vii)(d) Form of Opinion of Counsel to the Company
Schedule 3I Use of Proceeds
Exhibit A-1 -- Certificate of Designation
Exhibit A-2 -- Articles of Incorporation
Exhibit A-3 -- Bylaws
Exhibit B -- Registration Rights Agreement
Exhibit C -- Agreement of Merger
-ii-
<PAGE> 4
================================================================================
STOCK PURCHASE AGREEMENT
================================================================================
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
November 11, 1999, by and among WORLD COMMERCE ONLINE, INC., a Delaware
corporation (the "COMPANY"), INTERPRISE TECHNOLOGY PARTNERS, L.P., a Delaware
limited partnership ("INTERPRISE"), and the other Persons identified on the
signature pages attached hereto or selected by Interprise and added to the
signature pages prior to Closing (together with Interprise, the "PURCHASERS").
Except as otherwise indicated herein, capitalized terms used herein are defined
in Section 6 hereof.
In consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement, intending to be legally
bound, hereby agree as follows:
SECTION 1. AUTHORIZATION AND CLOSING.
1A. AUTHORIZATION OF THE STOCK. The Company shall authorize
the issuance and sale to the Purchasers of up to 5,110,000 shares of its Series
B Convertible Preferred Stock, par value $.001 per share (the "PREFERRED
STOCK"), having the rights and preferences set forth on the form of certificate
of designation attached hereto as Exhibit A-1 (the "CERTIFICATE OF
DESIGNATION").
1B. PURCHASE AND SALE OF THE STOCK.
(i) At the Closing (as defined below), the Company shall sell
to the Purchasers and, subject to the terms and conditions set forth
herein, Purchasers shall purchase from the Company, a minimum of
1,250,000 and a maximum of 5,000,000 shares of Preferred Stock at a
price of $4.00 per share, in such amounts and to such Purchasers as set
forth in the Purchase Schedule attached hereto and as amended according
to Section 1B below.. The closing of the purchase and sale of the
Preferred Stock pursuant hereto (the "CLOSING") shall take place at the
offices of Hogan & Hartson L.L.P., 555 Thirteenth Street, N.W.,
Washington, D.C. 20004-1109 at 10:00 a.m. on December 15, 1999 or such
other time and date as agreed in writing by Interprise and the Company.
At the Closing, after the purchase and sale of the Preferred Stock
pursuant hereto, the Company shall deliver to each Purchaser stock
certificates evidencing the Preferred Stock to be purchased by such
Purchaser, registered in such Purchaser's name, upon payment of the
purchase price thereof by check, cancellation of indebtedness or wire
transfer of immediately available funds to such account as is
designated by the Company. In the event that payment by a Purchaser is
made, in whole or in part, by cancellation of indebtedness, then such
Purchaser shall surrender to the Company for cancellation at the
Closing any evidence of such indebtedness or shall execute an
<PAGE> 5
instrument of cancellation in form and substance acceptable to the
Company. In addition, the Company shall deliver to any Purchaser
choosing to pay any part of the purchase price of the Preferred Stock
by cancellation of indebtedness, a check in the amount of any interest
accrued on such indebtedness through the Closing.
(ii) It is understood and agreed that prior to the Closing,
Interprise may select and add Purchasers (and their respective amounts)
to the Purchase Schedule and may increase the amount of Interprise's
investment in the Purchase Schedule, provided that the maximum number
of shares of Preferred Stock in the Purchase Schedule shall be
5,000,000.
SECTION 2. CONDITIONS OF THE PURCHASERS' OBLIGATIONS.
2A. CONDITIONS TO CLOSING. The obligation of the Purchasers to
purchase and pay for the Preferred Stock at the Closing is subject to the
satisfaction as of the Closing of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties contained in Section 5 hereof shall be
true and correct at and as of the Closing as though then made, except
to the extent of changes caused by the transactions expressly
contemplated herein, and the Company shall have performed all of the
covenants required to be performed by it hereunder prior to the
Closing.
(ii) ARTICLES OF INCORPORATION; BYLAWS. The Company's
articles of incorporation, together will all amendments thereto, the
Certificate of Designation, and any other certificates of designation
or other similar documents, including but not limited to the Amended
and Restated Certificate of Designations of Series A Preferred Stock,
or instruments filed with the Secretary of State of Delaware
(collectively, the "ARTICLES OF INCORPORATION") shall be in form and
substance set forth in Exhibit A-2 hereto, shall be in full force and
effect under the laws of Delaware as of the Closing and shall not have
been amended or modified. The Company's bylaws (the "BYLAWS") shall be
in form and substance set forth in Exhibit A-3 hereto, shall be in full
force and effect under the laws of Delaware as of the Closing, and
shall not have been amended or modified.
(iii) REGISTRATION AGREEMENT. The Company, the
Purchasers and all parties to the Registration Rights Agreement by and
between World Commerce Online, a Nevada corporation ("WCO-NEVADA"),
Interprise, and the other persons listed therein dated March 30, 1999
shall have entered into a registration rights agreement in form and
substance set forth in Exhibit B attached hereto (the "REGISTRATION
AGREEMENT"), and the Registration Agreement shall not have been amended
or modified, and shall be in full force and effect as of the Closing.
(iv) CONSENTS AND APPROVALS. The Company shall have
received or obtained all third-party and governmental and regulatory
consents and approvals necessary for the consummation of the
transactions contemplated hereby.
-2-
<PAGE> 6
(v) COMPLIANCE WITH APPLICABLE LAWS. The sale of
Preferred Stock to the Purchasers hereunder shall not be prohibited by
any applicable law or governmental regulation, and shall be permitted
by laws and regulations of the jurisdictions to which the Company is
subject.
(vi) FEES AND EXPENSES. The Company shall have
reimbursed Interprise for its fees and expenses as provided in Section
7A hereof.
(vii) CLOSING DOCUMENTS. The Company shall have
delivered to Interprise all of the following documents:
(a) an Officer's Certificate, dated the date
of the Closing, stating that the conditions specified in
Sections 2A(ii) through 2A(vi), inclusive, have been fully
satisfied;
(b) certified copies of the resolutions duly
adopted by the Company's board of directors (its "BOARD")
authorizing the execution, delivery, and performance of this
Agreement, the Registration Agreement, and each of the other
agreements contemplated hereby, the filing of the Certificate
of Designation referred to in Section 1A, the issuance and
sale of the Preferred Stock and the consummation of all other
transactions contemplated by this Agreement;
(c) certified copies of (1) the Certificate
of Designation; (2) the Articles of Incorporation; and (3) the
Company's Bylaws, each as in effect at the Closing; and
(d) the opinion, addressed to the
Purchasers, of Greenberg Traurig, P.A., counsel for the
Company, dated the date of the Closing, in the form attached
hereto as Schedule 2A(vii)(d).
(e) such other documents relating to the
transactions contemplated hereby as Interprise or its counsel
may reasonably request.
(viii) ABSENCE OF ADVERSE CHANGES. From the date
hereof until the Closing, there will have been no material adverse
change in the financial or business condition of the Company.
Any condition specified in this Section 2 may be waived only if such waiver is
set forth in a writing executed by Interprise.
SECTION 3. COVENANTS. As an inducement to enter into the
transactions contemplated by this Agreement, the Company hereby covenants to
undertake the obligations set forth in this Section 3. The covenants set forth
in Sections 3A through 3D below, shall, however, terminate upon the consummation
of a Qualified Public Offering.
-3-
<PAGE> 7
3A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
shall deliver to Interprise, each holder of at least fifteen percent (15%) of
the Purchaser Preferred and each holder of at least fifteen percent (15%) of the
Purchaser Common:
(i) as soon as available but in any event within
forty-five (45) days after the end of each quarterly accounting period
in each fiscal year, unaudited consolidating and consolidated
statements of income and cash flows of the Company and its Subsidiaries
for such quarterly period and for the period from the beginning of the
fiscal year to the end of such quarter, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of
the end of such quarterly period, all prepared in accordance with
generally accepted accounting principles, consistently applied, subject
to the absence of footnote disclosures and to normal year-end
adjustments;
(ii) accompanying the financial statements referred
to in Section 3A(i), an Officer's Certificate stating that neither the
Company nor any of its Subsidiaries is in default under any of its
other material agreements or, if any such default exists, specifying
the nature and period of existence thereof and what actions the Company
and its Subsidiaries have taken and propose to take with respect
thereto;
(iii) within ninety (90) days after the end of each
fiscal year, consolidating and consolidated statements of income and
cash flows of the Company and its Subsidiaries for such fiscal year,
and consolidating and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such fiscal year, setting forth in
each case comparisons to the annual budget and to the preceding fiscal
year, all prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by: (a) with respect
to the consolidated portions of such statements (except with respect to
budget data), an opinion containing no exceptions or qualifications
(except for qualifications regarding specified contingent liabilities)
of an independent accounting firm of recognized standing reasonably
acceptable to Interprise; and (b) a copy of such firm's annual
management letter to the Board;
(iv) promptly upon receipt thereof, any additional
reports, management letters or other detailed information concerning
significant aspects of the Company's operations or financial affairs
given to the Company by its independent accountants (and not otherwise
contained in other materials provided hereunder);
(v) at least thirty (30) days before the beginning of
each fiscal year, an annual budget prepared on a monthly basis for the
Company and its Subsidiaries for such fiscal year (displaying
anticipated statements of income and cash flows), and promptly upon
preparation thereof any other significant budgets prepared by the
Company and any revisions of such annual or other budgets, and within
thirty (30) days after any monthly period in which there is a material
adverse deviation from the annual budget, an Officer's Certificate
explaining the deviation and what actions the Company has taken and
proposes to take with respect thereto;
-4-
<PAGE> 8
(vi) promptly (but in any event within five (5)
business days) after the discovery or receipt of notice of any default
under any material agreement to which the Company or any of its
Subsidiaries is a party or any other event or circumstance affecting
the Company or any of its Subsidiaries which is reasonably likely to
have a material adverse effect on the financial condition, operating
results, assets, operations, or business prospects of the Company or
any of its Subsidiaries (including the filing of any material
litigation against the Company or any of its Subsidiaries or the
existence of any material dispute with any Person which involves a
reasonable likelihood of such litigation being commenced), an Officer's
Certificate specifying the nature and period of existence thereof and
what actions the Company and its Subsidiaries have taken and propose to
take with respect thereto; and
(vii) with reasonable promptness, such other
information and financial data concerning the Company and its
Subsidiaries as any Person entitled to receive information under this
Section 3A may reasonably request.
Each of the financial statements referred to in Sections 3A(i) and (iii) shall
be consistent with the books and records of the Company (which in turn shall be
accurate and complete in all respects) and in accordance with GAAP applied on a
consistent basis shall present fairly the financial condition and results of
operation of the Company and its Subsidiaries as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end audit adjustments (none of
which would, alone or in the aggregate, be materially adverse to the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole).
3B. INSPECTION OF PROPERTY. The Company shall permit
Interprise, each holder of at least fifteen percent (15%) of the Purchaser
Common, and each holder of at least fifteen percent (15%) of the Purchaser
Preferred, or the representatives of any such Person, upon reasonable notice and
during normal business hours and such other times as any such holder may
reasonably request, to: (i) visit and inspect any of the properties of the
Company and its Subsidiaries; (ii) examine the corporate and financial records
of the Company and its Subsidiaries and make copies thereof or extracts
therefrom; and (iii) discuss the affairs, finances, and accounts of any such
corporations with the directors, officers, key employees, and independent
accountants of the Company and its Subsidiaries; provided that the Company shall
have the right to have its chief financial officer present at any meetings with
the Company's independent accountants.
3C. RESTRICTIONS. Without the prior written consent of
Interprise, the Company shall not and shall not commit to:
(i) directly or indirectly declare or pay any
dividends or make any distributions upon any of its equity securities,
other than payments of dividends on, or redemption payments in respect
of, the Preferred Stock pursuant to the Articles of Incorporation;
-5-
<PAGE> 9
(ii) except pursuant to this Agreement, directly or
indirectly redeem, purchase, or otherwise acquire, or permit any of its
Subsidiaries to redeem, purchase, or otherwise acquire, any of the
Company's or any Subsidiary's equity securities (including, without
limitation, warrants, options, and other rights to acquire equity
securities);
(iii) except as expressly contemplated by this
Agreement, authorize, issue, sell, or enter into any agreement
providing for the issuance (contingent or otherwise), or permit any of
its Subsidiaries to authorize, issue, sell, or enter into any agreement
providing for the issuance (contingent or otherwise) of any equity
securities or debt securities with equity features or securities
exercisable or convertible into equity securities or debt securities
with equity features;
(iv) merge or consolidate with any Person or permit
any of its Subsidiaries to merge or consolidate with any Person (other
than a wholly owned Subsidiary);
(v) sell, lease, or otherwise dispose of, or permit
any of its Subsidiaries to sell, lease, or otherwise dispose of, more
than ten percent (10%) of the consolidated assets of the Company and
its Subsidiaries (computed on the basis of book value, determined in
accordance with generally accepted accounting principles consistently
applied, or fair market value, determined by the Board in its
reasonable good faith judgment) in any transaction or series of related
transactions (other than sales of inventory in the ordinary course of
business);
(vi) liquidate, dissolve, or effect, or permit any of
its Subsidiaries to liquidate, dissolve, or effect, a recapitalization
or reorganization in any form of transaction (including, without
limitation, any reorganization into partnership form);
(vii) acquire, or permit any of its Subsidiaries to
acquire, any interest in any business (whether by a purchase of assets,
purchase of stock, merger, or otherwise), or enter into any joint
venture, in excess of $100,000;
(viii) enter into, or permit any of its Subsidiaries
to enter into, the ownership, active management, or operation of any
business that is materially different from the businesses in which the
Company and its Subsidiaries were engaged on the date of this
Agreement;
(ix) enter into, amend, modify, or supplement or
permit any of its Subsidiaries to enter into, amend, modify, or
supplement any agreement, transaction, commitment, or arrangement with
any of its or any of its Subsidiaries' officers, directors, or senior
executive employees;
(x) create, incur, assume, or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume, or suffer to
exist, Indebtedness or other non-ordinary course liabilities exceeding
the amounts approved therefor by the Board in the annual budget;
-6-
<PAGE> 10
(xi) make, or permit any of its Subsidiaries to make,
any loans or advances to, guarantees for the benefit of, or Investments
in, any Person (other than a wholly-owned Subsidiary), except for: (a)
reasonable advances to employees in the ordinary course of business;
and (b) Investments having a stated maturity no greater than one year
from the date the Company makes such Investment in (1) obligations of
the United States government or any agency thereof or obligations
guaranteed by the United States government, (2) certificates of deposit
of commercial banks having combined capital and surplus of at least $50
million or (3) commercial paper with a rating of at least "Prime-1" by
Moody's Investors Service, Inc.;
(xii) except as expressly contemplated by this
Agreement, make any amendment to the Articles of Incorporation or the
Company's bylaws, or file any resolution of the Board or certificate of
designation with the Secretary of State of Delaware;
(xiii) make any capital expenditures (including,
without limitation, payments with respect to capitalized leases, as
determined in accordance with generally accepted accounting principles
consistently applied) exceeding $100,000, except as permitted by any
budget approved by the Board;
(xiv) hire, terminate, suspend, promote or demote any
senior executive employee of the Company or any of its Subsidiaries;
(xv) enter into, or cause any Subsidiary to enter
into, any agreement which would (under any circumstances) restrict the
Company's or any of its Subsidiaries' right or ability to perform the
provisions of this Agreement or any of the other agreements or
instruments contemplated hereby or to conduct its business as currently
conducted or as proposed to be conducted at any time; or
(xvi) approve any business plan or annual budget of
the Company or any of its Subsidiaries for any fiscal year.
3D. AFFIRMATIVE COVENANTS. Unless the Company obtains the
prior written consent of Interprise, the Company shall, and shall cause each
Subsidiary to:
(i) comply with all applicable laws, rules, and
regulations of all governmental authorities, the violation of which
would reasonably be expected to have a material adverse effect upon the
financial condition, operating results, assets, operations, or business
prospects of the Company and its Subsidiaries taken as a whole, and pay
and discharge when payable all Taxes, assessments, and governmental
charges (except to the extent the same are being contested in good
faith and adequate reserves therefor have been established);
(ii) enter into and maintain appropriate
non-disclosure, noncompete, and non-solicitation agreements with its
key employees; and
-7-
<PAGE> 11
(iii) cause any agreement entered into by the Company
or any Subsidiary after the date hereof which provides for the sale of
capital stock of the Company (or the capital stock of any Subsidiary of
the Company) to, or employment of, a senior management to be in form
and substance substantially similar to the draft of such agreement
reviewed and approved by Interprise.
3E. CURRENT PUBLIC INFORMATION. At all times after the Company
has filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable: (i) such holders
to sell Restricted Securities pursuant to Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission; or (ii) the Company to be eligible to
register its securities pursuant to a registration statement on Form S-2 or S-3
or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements. Until such time as the Company has filed a registration
statement with the Securities and Exchange Commission pursuant to the
requirements of either the Securities Act or the Securities Exchange Act, the
Company shall file all reports required to be filed by it by the National
Association of Securities Dealers, Inc., or any affiliate thereof (the "NASD"),
and shall comply with all rules and requirements of the NASD which are
applicable to the Company, and shall Comply with all rules and regulations
adopted by the Securities and Exchange Commission which apply to the Company's
current status as a "publicly traded company" on the NASD "bulletin board"
system.
3F. LIMITED PREEMPTIVE RIGHTS.
(i) Except for the issuance of Stock or any
securities containing options or rights to acquire any shares of Stock: (a) to
employees, consultants, officers, or directors of the Company or an Affiliate
thereof pursuant to arrangements approved by the Board; (b) in connection with
acquisitions approved by the Board; (c) in connection with financing
transactions approved by the Board; or (d) pursuant to a public offering
registered under the Securities Act, if the Company at any time after the
Closing and prior to the consummation of the earlier of a Sale of the Company or
Qualified Public Offering authorizes the issuance or sale of any shares of any
class of capital stock or any securities containing options or rights to acquire
any shares of any class of capital stock ("OPTIONS") (other than as a dividend
or distribution on outstanding shares of capital stock), then the Company shall
first offer to sell to each holder of Purchaser Stock a portion of such capital
stock or Options equal to the quotient determined by dividing (1) the number of
shares of Common Stock held by such holder, assuming the conversion of all
shares of all series of Preferred Stock by (2) the total number of shares of
Common
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Stock outstanding immediately before such issuance assuming all shares
of all classes of Preferred Stock were converted. Each holder of
Purchaser Stock shall be entitled to purchase all or any portion of
such capital stock or Options at the most favorable price and on the
most favorable terms as such capital stock or Options are to be offered
to any other Persons.
(ii) In order to exercise its purchase rights
hereunder, a holder of Purchaser Stock must within fifteen (15) days
after receipt of written notice from the Company describing in
reasonable detail the stock or securities being offered, the purchase
price thereof, the payment terms, and such holder's percentage
allotment deliver a written notice to the Company describing its
election hereunder. If all of the capital stock and Options offered to
the holders of Purchaser Stock is not fully subscribed by such holders,
then the remaining stock and securities shall be reoffered by the
Company to the holders purchasing their full allotment upon the terms
set forth in this paragraph, except that such holders must exercise
their purchase rights within five (5) days after receipt of such
reoffer.
(iii) Upon the expiration of the offering periods
described above, the Company shall be entitled to sell such stock or
securities which the holders of Purchaser Stock have not elected to
purchase during the ninety (90) days following such expiration on terms
and conditions no more favorable to the purchasers thereof than those
offered to such holders. Any stock or securities offered or sold by the
Company after such ninety (90) day period must be reoffered to the
holders of Purchaser Stock pursuant to the terms of this paragraph.
(iv) Nothing contained in this paragraph 3F shall be
deemed to amend, modify, or limit in any way the restrictions on the
issuance of shares of stock set forth in paragraph 3C hereof or
elsewhere in this Agreement, in the Articles of Incorporation, or in
any other agreement to which the Company is bound.
3G. PUBLIC DISCLOSURES. The Company shall not, nor shall it
permit any of its Subsidiaries or other Affiliates to, disclose Interprise's (or
its Affiliates') name or identity as an investor in the Company in any press
release or other public announcement or in any document or material filed with
any governmental entity, without the prior written consent of Interprise, unless
such disclosure is required by applicable law or governmental regulations or by
order of a court of competent jurisdiction, in which case, before making such
disclosure the Company shall give written notice to Interprise describing in
reasonable detail the proposed content of such disclosure and shall permit
Interprise to review and comment upon the form and substance of such disclosure.
3H. HART-SCOTT-RODINO COMPLIANCE. In connection with any
transaction in which the Company, or any Subsidiary is involved which is
required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended from time to time (the "HSR ACT"), the Company, or any such
Subsidiary, shall prepare and file all documents with the Federal Trade
Commission and the United States Department of Justice which may be required
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to comply with the HSR Act, and shall promptly furnish all materials thereafter
requested by any of the regulatory agencies having jurisdiction over such
filings, in connection with the transactions contemplated thereby. The Company,
or any such Subsidiary, shall take all reasonable actions and shall file and use
reasonable best efforts to have declared effective or approved all documents and
notifications with any governmental or regulatory bodies, as may be necessary or
may reasonably be requested under federal antitrust laws for the consummation of
the subject transaction.
3I. USE OF PROCEEDS. The Company shall us the proceeds of the
issuance and sale of the Preferred Stock solely as provided in Schedule 3I.
SECTION 4. TRANSFER OF RESTRICTED SECURITIES. Each Purchaser
acknowledges that the Restricted Securities are transferable only pursuant to:
(a) public offerings registered under the Securities Act; (b) Rule 144 or Rule
144A of the Securities and Exchange Commission (or any similar rule or rules
then in force) if such rule or rules are available; and (c) any other legally
available means of transfer. In connection with the transfer of any Restricted
Securities (other than a transfer described in clauses (a) or (b) above), the
holder thereof shall deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer. In addition, upon the
request of Interprise, the Company shall promptly supply to Interprise or its
prospective transferees all information regarding the Company required to be
delivered in connection with a transfer pursuant to Rule 144A of the Securities
and Exchange Commission.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Purchasers to enter into this Agreement and purchase
the Stock, the Company hereby represents and warrants to the Purchasers that,
except as expressly set forth on the Schedule of Exceptions attached hereto:
5A. ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware and is qualified to do business in every jurisdiction in which
the failure to so qualify might reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets,
operations, or business prospects of the Company and its Subsidiaries taken as a
whole. The Company has all requisite corporate power and authority and all
material licenses, permits, and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted, and to carry out the transactions contemplated by this
Agreement and by the Agreement of Merger. The copies of the Company's Articles
of Incorporation and Bylaws, and the copies of the articles of incorporation and
bylaws (or other similar organizational documents) of each Subsidiary of the
Company, which have been furnished to Interprise's counsel, reflect all
amendments made thereto at any time before the Applicable Date and are correct
and complete.
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<PAGE> 14
5B. CAPITAL STOCK AND RELATED MATTERS.
(i) The authorized capital stock of the Company
consists of 100,000,000 shares of capital stock, consisting of
90,000,000 shares of Common Stock, par value $.001 per share, and
10,000,000 shares of Preferred Stock, par value $.001 per share, of
which 4,250,000 are designated as Series A Convertible Preferred Stock,
par value $.001 per share. Immediately prior to the Closing, the
authorized capital stock of the Company shall consist of 100,000,000
shares of capital stock, consisting of 90,000,000 shares of Common
Stock, par value $.001 per share, and 10,000,000 shares of Preferred
Stock, par value $.001 per share, of which 4,250,000 shall be
designated as Series A Convertible Preferred Stock, par value $.001 per
share, and of which 5,110,000 shares shall be designated as Series B
Convertible Preferred Stock, par value $.001 per share. The Company
has, and immediately prior to the Closing shall have, 15,305,000 shares
of Common Stock and 4,000,000 shares of Series A Convertible Preferred
Stock issued and outstanding. Except for such issued and outstanding
shares, the Company does not have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock or
containing any profit participation features, nor does it have
outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or
phantom stock plans other than pursuant to, and as contemplated by,
this Agreement. The Company is not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire
any shares of its capital stock or any warrants, options, or other
rights to acquire its capital stock, except pursuant to this Agreement
and its Certificate of Incorporation. All of the outstanding shares of
the Company's capital stock are and shall be validly issued, fully
paid, and nonassessable.
(ii) Except as set forth in the Stock Purchase
Agreement by and between WCO-Nevada and Interprise dated March 30,
1999, there are no statutory or contractual stockholders preemptive
rights or rights of refusal with respect to the issuance of any of the
Stock hereunder, except as expressly provided herein. Based in part on
the investment representations of the Purchasers in Section 7C hereof,
the Company has not violated any applicable federal or state securities
laws in connection with the offer, sale, or issuance of any of its
capital stock, and the offer, sale, and issuance of the Stock hereunder
does not and will not require registration under the Securities Act or
any applicable state securities laws. There are no agreements between
the Company's stockholders with respect to the voting or transfer of
the Company's capital stock or with respect to any other aspect of the
Company's affairs.
5C. AUTHORIZATION; NO BREACH. The execution, delivery, and
performance of this Agreement, the Registration Agreement, and all other
agreements contemplated hereby to which the Company is from time to time a party
and the filing of the Articles of Incorporation and the filing of the
Certificate of Designation have been duly authorized by the Company. This
Agreement, the Registration Agreement, the Certificate of Designation, the
Articles of Incorporation, and all other agreements contemplated hereby from
time to time to which the Company or any Subsidiary is a party each constitutes
a valid and binding obligation of such Person, enforceable in accordance with
its terms. The execution and delivery by the Company of
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<PAGE> 15
this Agreement, the Registration Agreement, and all other agreements
contemplated hereby to which the Company is a party, the offering, sale, and
issuance of the Stock hereunder, the Certificate of Designation, the Articles of
Incorporation and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company do not and will not: (i) conflict with or
result in a breach of the terms, conditions, or provisions of; (ii) constitute a
default under; (iii) result in the creation of any Lien, security interest,
charge, or encumbrance upon the Company's capital stock or assets pursuant to;
(iv) give any third party the right to modify, terminate, or accelerate any
obligation under; (v) result in a violation of; or (vi) require any
authorization, consent, approval, exemption, or other action by or notice to any
court or administrative or governmental body pursuant to, the Articles of
Incorporation or Bylaws of the Company, or any law, statute, rule, or regulation
to which the Company is subject, or any agreement, instrument, order, judgment,
or decree to which the Company or any of its Affiliates, or employees is a party
or by which it or any of the foregoing Persons is bound.
5D. SUBSIDIARIES; INVESTMENTS. The Company does not own or
hold any shares of stock or any other security or interest in any other Person
or any rights to acquire any such security or interest, and the Company has
never had any Subsidiary.
5E. CONDUCT OF BUSINESS; LIABILITIES. Other than the
negotiation, execution and delivery of this Agreement, the Registration
Agreement and the other agreements contemplated hereby and thereby, and except
as has been disclosed or made available to Interprise, prior to the Closing, the
Company (including WCO-Nevada prior to the consummation of the Merger) has not:
(i) conducted any business; (ii) incurred any material expenses, obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company and whether due or to become due and
regardless of when asserted); (iii) owned any material assets; (iv) entered into
any material contracts or agreements; or (v) violated any laws or governmental
rules or regulations.
5F. TAX MATTERS. The Company (including WCO-Nevada prior to
the consummation of the Merger) has filed all tax returns (if any) which it is
required to file under applicable laws and regulations; all such returns are
complete and correct in all material respects; the Company (including WCO-Nevada
prior to the consummation of the Merger) has paid all taxes due and owing by it
and has withheld and paid over all taxes which it is obligated to withhold from
amounts paid or owing to any employee, stockholder, creditor or other third
party; the Company (including WCO-Nevada prior to the consummation of the
Merger) has not waived any statute of limitations with respect to taxes or
agreed to any extension of time with respect to a tax assessment or deficiency;
the assessment of any additional taxes for periods for which returns have been
filed is not expected; no foreign, federal, state or local tax audits are
pending or being conducted with respect to the Company (including WCO-Nevada),
no information related to tax matters has been requested by any foreign,
federal, state or local taxing authority and no notice indicating an intent to
open an audit or other review has been received by the Company (including
WCO-Nevada) from any foreign, federal, state or local taxing authority; and
there are no unresolved questions or claims concerning the Company's (including
WCO-Nevada's) tax liability. The Company (including WCO-Nevada prior to the
consummation of the Merger) has not made an election under ss.341(f) of the IRC.
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<PAGE> 16
5G. LITIGATION, ETC. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the best of the Company's
knowledge, threatened against or affecting the Company (including WCO-Nevada)
(or to the best of the Company's knowledge, pending or threatened against or
affecting any of the officers, directors or employees of the Company (including
WCO-Nevada) with respect to their business or proposed business activities) at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality (including, without limitations, any
actions, suits, proceedings or investigations with respect to the transactions
contemplated by this Agreement) which could have a material adverse effect on
the financial condition, operating results, assets, operations or business
prospects of the Company, taken as a whole; the Company (including WCO-Nevada)
is not subject to any arbitration proceedings under collective bargaining
agreements or otherwise or, to the best of the Company's knowledge, any
governmental investigations or inquiries; and, to the best of the Company's
knowledge, there is no basis for any of the foregoing. The Company (including
WCO-Nevada prior to the consummation of the Merger) is not subject to any
judgment, order or decree of any court or other governmental agency. The Company
(including WCO-Nevada) has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business.
5H. BROKERAGE. There are no claims for brokerage commissions,
finders, fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company. The Company shall pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorneys fees and out-of-pocket expenses) arising in connection with any such
claim.
5I. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby.
5J. ERISA. The Company does not maintain or have any
obligation to contribute to or any other liability with respect to or under
(including but not limited to current or potential withdrawal, liability), nor
has either of them ever maintained or had any obligation to contribute to or any
other liability with respect to or under: (i) any plan or arrangement whether or
not terminated, which provides medical, health, life insurance or other welfare
types benefits for current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under Section
4980B of the IRC or as required under applicable state law); (ii) any
"mutliemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"); (iii) any employee plan which
is a tax-qualified "defined benefit plan" (as defined in Section 3(35) of
ERISA), whether or not terminated; (iv) any employee plan which is tax-qualified
"defined contribution plan" (as defined in Section 3(34) of ERISA), whether or
not terminated; or (v) any other plan or arrangement
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<PAGE> 17
providing benefits to current or former employees, including any bonus plan,
plan for deferred compensation, employee health or other welfare benefit plan or
other arrangement, whether or not terminated. For purposes of this Section 5J,
the term "Company" includes all organizations under common control with the
Company pursuant to Section 414(b) or (c) of the IRC.
5K. COMPLIANCE WITH LAWS. The Company has not violated any law
or any governmental regulation or requirement which violation would reasonably
be expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company, and
the Company has not received notice of any such violation (including violations
by WCO-Nevada prior to the consummation of the Merger). Prior to the
consummation of the Merger, WCO-Nevada did not violate any law or any
governmental regulation or requirement which violation would reasonably be
expected to have had a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of WCO-Nevada or
would reasonably be expected to have a material adverse effect upon the
financial condition, operating results, assets, operations or business prospects
of the Company, and WCO-Nevada did not receive notice of any such violation. The
Company is not subject to any clean up liability, and the Company has no reason
to believe it may become subject to any clean up liability, under any federal,
state or local environmental law, rule or regulation.
5L. MERGER WITH WCO-NEVADA.
(i) The Company and WCO-Nevada have consummated the
Merger, and the Merger was effective October 18, 1999.
(ii) Neither the Company nor WCO-Nevada materially
breached or is in material breach of the Agreement of Merger.
(iii) No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of or
unwinding, voiding or nullifying the Merger was issued by any court of
competent jurisdiction.
(iv) There is not pending or threatened any Legal
Proceeding in which a Governmental Body or any of the stockholders of
the Company or WCO-Nevada is or is threatened to become a party or is
otherwise involved: (a) challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions
contemplated in the Agreement of Merger; (b) relating to the Merger; or
(c) which would materially and adversely affect the right of the
Company to own the assets or operate the business of the Company.
5M. DISCLOSURE. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to the Purchasers by or on behalf of the Company with
respect to the transactions contemplated hereby contain any untrue statement of
a material fact or omit a material fact necessary to make each statement
contained herein or therein not misleading. There is no fact which the Company
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<PAGE> 18
has not disclosed to the Purchasers in writing and of which any of its officers,
directors or executive employees is aware and which has had or might reasonably
be anticipated to have a material adverse effect upon the existing or expected
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Company (including facts
relating to WCO-Nevada prior to the consummation of the Merger).
5N. CLOSING DATE. The representations and warranties of the
Company contained in this Section 5 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
writing delivered by, or on behalf of, the Company to the Purchasers shall be
true and correct in all respects on the date of the Closing as though then made,
except as affected by the transactions expressly contemplated by this Agreement.
SECTION 6. DEFINITIONS. For the purposes of this Agreement,
the following terms have the meanings set forth below:
"AFFILIATE" of any particular person or entity means any other
person or entity controlling, controlled by, or under common control with such
particular person or entity.
"AFFILIATED GROUP" means an affiliated group as defined in
Section 1504 of the IRC (or any analogous combined, consolidated, or unitary
group defined under state, local, or foreign income Tax law).
"COMMON STOCK" means the Company's common stock, par value
$0.001 per share.
"GOVERNMENTAL BODY" means any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, office, official, ministry, organization, unit, body or entity
and any court or other tribunal).
"INDEBTEDNESS" means all indebtedness for borrowed money
(including purchase money obligations), all indebtedness under revolving credit
arrangements, all capitalized lease obligations, and all guarantees of any of
the foregoing, involving any amount or amounts in excess of $100,000.
"INVESTMENT" as applied to any Person means: (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities, or ownership interest (including partnership
interests and joint venture interests of any other Person, and; (ii) any capital
contribution by such Person to any other Person.
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<PAGE> 19
"IRC" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"LEGAL PROCEEDING" means any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or arbitration
panel.
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company, any of its
Subsidiaries or any of its Affiliates, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect owner-ship by a third party of property leased to
the Company or any of its Subsidiaries under a lease which is not in the nature
of a conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person (other than any subordination arising in
the ordinary course of business).
THE "MERGER" means the merger of the Company with WCO-Nevada,
pursuant to the Agreement and Plan of Merger by and between the Company and
WCO-Nevada, attached hereto as Exhibit C (the "AGREEMENT OF Merger"), in which
WCO-Nevada merged with and into the Company, such that the separate existence of
WCO-Nevada ceased and the Company continued as the surviving corporation.
"OFFICER'S CERTIFICATE" means a certificate signed by the
Company's President or its Chief Financial Officer, stating that: (i) the
officer signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy of
the information set forth in such certificate; and (ii) such certificate does
not misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, and a governmental
entity or any department, agency, or political subdivision thereof.
"PREFERRED STOCK" means the Company's Series B Convertible
Preferred Stock, par value $0.001 per share.
"PURCHASER COMMON" means: (i) the Common Stock issued to
Purchasers upon the conversion of the Preferred Stock; and (ii) any capital
stock issued or issuable with respect to the Common Stock referred to in clause
(i) above by way of stock dividends or stock splits or in connection with a
combination of shares, recapitalization, merger, consolidation, or other
reorganization. As to any particular shares of Purchaser Common, such shares
shall cease to be
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<PAGE> 20
Purchaser Common when they have been: (a) effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them; or (b) distributed to the public through a broker, dealer, or
market maker pursuant to Rule 144 under the Securities Act (or any similar rule
then in force).
"PURCHASER PREFERRED" means (i) the Preferred Stock issued to
Purchasers hereunder; and (ii) any capital stock issued or issuable with respect
to the Preferred Stock referred to in clause (i) above by way of stock dividends
or stock splits or in connection with a combination of shares, recapitalization,
merger, consolidation, or other reorganization. As to any particular shares of
Purchaser Preferred, such shares shall cease to be Purchaser Preferred when they
have been: (a) converted into Common Stock; (b) redeemed by the Company; (c)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them; or (d) distributed to the public
through a broker, dealer, or market maker pursuant to Rule 144 under the
Securities Act (or any similar rule then in force).
"PURCHASER STOCK" means the Purchaser Preferred and the
Purchaser Common.
"QUALIFIED PUBLIC OFFERING" means an underwritten public
offering of shares of Common Stock registered under the Securities Act in which
the aggregate price paid by the public for such shares is at least $15 million.
For purposes of this Agreement, a Qualified Public Offering shall be deemed to
have occurred upon the effectiveness of the registration statement filed with
respect to such offering, subject to any consequences under this Agreement of
such Qualified Public Offering having been deemed to have occurred being
reversed and nullified if the closing of the sale of such shares pursuant to
such offering does not occur within ten business days after such effectiveness.
"RESTRICTED SECURITIES" means: (i) the Stock issued hereunder;
and (ii) any securities issued with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
the conversion of stock, or in connection with combination of shares,
recapitalization, merger, consolidation, or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be Restricted
Securities when they have: (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them;
(b) become eligible for sale pursuant to Rule 144(k) (or any similar provision
then in force) under the Securities Act; or (c) been otherwise transferred and
new certificates for them not bearing the Securities Act legend set forth in
Section 7C have been delivered by the Company in accordance with Section 7C.
Whenever any particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the Company, without expense, new
securities of like tenor not bearing a Securities Act legend of the character
set forth in Section 7C.
"SALE OF THE COMPANY" means: (i) any sale, transfer, or
issuance or series of sales, transfers, and/or issuances of capital stock of the
Company by the Company or any holders thereof which results in any Person or
group of Persons (as the term "group" is used under the Securities Exchange
Act), other than the holders of Common Stock and Preferred Stock as of the
Closing, owning capital stock of the Company possessing the voting power (under
ordinary circumstances) to elect a majority of the Board; and (ii) any sale or
transfer of all or substantially
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<PAGE> 21
all of the assets of the Company and its Subsidiaries in any transaction or
series of transactions (other than sales in the ordinary course of business).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental
body or agency succeeding to the functions thereof.
"STOCK" means the Company's Preferred Stock and Common Stock.
"SUBSIDIARY" means, with respect to any Person, any
corporation, limited liability company, partnership, association, or other
business entity of which: (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof;
or (ii) if a limited liability company, partnership, association, or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association, or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association, or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association, or other business
entity. References to a "SUBSIDIARY" of the Company shall be given effect only
at such times as the Company has one or more Subsidiaries.
"TAX" OR "TAXES" means any: (i) federal, state, local, or
foreign income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties, or additions to tax or additional amounts in respect of the
foregoing; (ii) liability of the Company for the payment of any amounts of the
type described in clause (i) arising as a result of being (or ceasing to be) a
member of any Affiliated Group (or being included (or required to be included)
in any Tax Return relating thereto); and (iii) liability of the Company for the
payment of any amounts of the type described in clause (i) as a result of any
express or implied obligation to indemnify or otherwise assume or succeed to the
liability of any other person (including, but not limited to, as a successor or
transferee).
-18-
<PAGE> 22
"TAX RETURNS" means returns, declarations, reports, claims for
refund, information returns, or other documents (including any related or
supporting schedules, statements, or information) filed or required to be filed
in connection with the determination, assessment, or collection of Taxes of any
party or the administration of any laws, regulations, or administrative
requirements relating to any Taxes.
SECTION 7. MISCELLANEOUS.
7A. EXPENSES. As an inducement for the general partner of
Interprise to provide services to the Company in connection with the
transactions contemplated hereby and as a further inducement for Interprise to
consummate the transactions contemplated hereby, the Company agrees to pay to
the general partner of Interprise a closing fee of $350,000, payable at the
Closing. In addition, the Company shall reimburse Interprise for its reasonable
fees and expenses (including its reasonable fees and expenses of its counsel and
other advisors) which Interprise has incurred in connection with the
transaction. In addition, the Company agrees to pay, and hold each of
Interprise, the Purchasers and the other holders of Purchaser Stock harmless
against liability for the payment of: (i) its reasonable fees and expenses
(including its reasonable fees and expenses of its counsel and other advisors)
arising in connection with the interpretation and enforcement of its rights
under, this Agreement, the Registration Agreement, the other agreements
contemplated hereby and thereby, the Articles of Incorporation and the Company's
Bylaws, and the consummation of the transactions contemplated hereby and thereby
(including, but not limited to, reasonable fees and expenses arising with
respect to any subsequent or proposed acquisitions, sales, mergers, or
recapitalizations by the Company and its Subsidiaries); (ii) the reasonable fees
and expenses incurred with respect to any amendments or waivers (whether or not
the same become effective) under or in respect of this Agreement, the
Registration Agreement, the other agreements contemplated hereby, and thereby
and the Articles of Incorporation and the Company's Bylaws; (iii) reasonable
travel expenses and other reasonable out-of-pocket fees and expenses as have
been or may be incurred by Interprise, its directors, officers and employees in
connection with the transactions contemplated hereby (including, but not limited
to, reasonable fees and expenses incurred in attending Company-related
meetings); and (iv) stamp and other Taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance, delivery, or
acquisition of any shares of Stock purchased hereunder.
7B. REMEDIES. Each holder of Stock issued hereunder shall have
all rights and remedies set forth in this Agreement and the Articles of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law.
7C. PURCHASERS' INVESTMENT REPRESENTATIONS. Each Purchaser
hereby represents that such Purchaser is acquiring the Restricted Securities
purchased hereunder or
-19-
<PAGE> 23
acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no intention
of selling such securities in a public distribution in violation of the federal
securities laws or any applicable state securities laws; provided that nothing
contained herein shall prevent such Purchaser and subsequent holders of
Restricted Securities from transferring such securities in compliance with the
provisions of Section 4 hereof.
Each certificate for Restricted Securities shall be imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED ON ___________ __, 1999, AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK PURCHASE
AGREEMENT, DATED AS OF NOVEMBER 11, 1999, BETWEEN THE ISSUER
(THE "COMPANY") AND CERTAIN INVESTORS, AND THE COMPANY
RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT
CHARGE."
If the holder of the Restricted Securities delivers to the Company an
opinion of qualified securities counsel reasonably acceptable to the Company
that no subsequent transfer of such Restricted Securities shall require
registration under the Securities Act, however, the Company shall promptly upon
such contemplated transfer deliver new certificates for such Restricted
Securities which do not bear the Securities Act legend set forth in this Section
7C.
7D. CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if and when the Company has obtained the written
consent of Interprise, unless or until Interprise no longer has any rights under
this Agreement, at which time the Company need only obtain the written consent
of a successor to the rights and obligations of Interprise. No other course of
dealing between the Company and the holder of any Stock or any delay in
exercising any rights hereunder or under the Articles of Incorporation shall
operate as a waiver of any rights of any such holders. For purposes of this
Agreement, shares of Stock held by the Company or any Subsidiaries shall not be
deemed to be outstanding.
7E. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive
-20-
<PAGE> 24
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement, regardless of any investigation
made by any Purchaser or on its behalf.
7F. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so expressed
or not; provided that this Agreement may not be assigned by the Company without
the consent of Interprise. In addition, and whether or not any express
assignment has been made, the provisions of this Agreement which are for a
Purchaser's benefit as a purchaser or holder of Stock are also for the benefit
of, and enforceable by, any subsequent holder of such Stock. The rights and
obligations of Interprise under this Agreement and the agreements contemplated
hereby may be assigned by Interprise at any time, in whole or in part, to any
investment fund managed by Miller Technology Management, L.P. or its Affiliates,
or any successor thereto.
7G. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Where any
accounting determination or calculation is required to be made under this
Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with generally accepted
accounting principles, consistently applied, except that, if because of a change
in generally accepted accounting principles the Company would have to alter a
previously utilized accounting method or policy in order to remain in compliance
with generally accepted accounting principles, then such determination or
calculation shall continue to be made in accordance with the Company's previous
accounting methods and policies. All numbers set forth herein which refer to
share prices or numbers or amount will be appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares, and other
recapitalizations affecting the subject class of stock.
7H. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, then such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
7I. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.
7J. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine, or neuter forms, and the singular form of nouns, pronouns,
and verbs shall include the plural and vice versa. The use of the word
"INCLUDING" in this Agreement shall be by way of example rather than by
limitation. Reference to any
-21-
<PAGE> 25
agreement, document, or instrument means such agreement, document, or instrument
as amended or otherwise modified from time to time in accordance with the terms
thereof, and if applicable hereof. Without limiting the generality of the
immediately preceding sentence, no amendment or other modification to any
agreement, document, or instrument that requires the consent of any Person
pursuant to the terms of this Agreement or any other agreement will be given
effect hereunder unless such Person has consented in writing to such amendment
or modification.
7K. GOVERNING LAW. The corporate law of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, and interpretation of
this Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
7L. NOTICES. All notices, demands, or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, upon machine-generated acknowledgment of receipt
after transmittal by facsimile, sent to the recipient by reputable express
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested, and postage prepaid. Such notices,
demands, and other communications shall be sent to the Purchasers and to the
Company at the address indicated below:
If to the Company:
World Commerce Online, Inc.
9677 Tradeport Drive
Orlando, FL 32827
Attention: Robert Shaw
Facsimile: (407) 240-9228
with a copy (which shall not constitute notice) to:
Greenberg Traurig, P.A.
111 North Orange Avenue, 20th Floor
Orlando, FL 32801
Attention: Jeffery A. Bahnsen
Facsimile: (407) 420-5909
-22-
<PAGE> 26
If to any Purchaser:
c/o Miller Technology Management, L.P.
1001 Brickell Bay Drive
30th Floor
Miami, FL 33131
Attention: David R. Parker
Facsimile: (305) 374-3317
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: Mark A. Kass
Facsimile: (202) 637-5910
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
7M. RIGHTS. This Agreement shall not confer any rights or
remedies upon any Person, other than the parties hereto and their respective
heirs, successors, and permitted assigns.
7N. AMENDMENTS. Any reference contained herein to any
agreement, instrument, or other document shall include any amendments or
modifications made to such agreement, instrument, or other document made from
time to time in accordance with the terms thereof, and if applicable, hereof.
7O. SEVERAL OBLIGATIONS. The obligations of the Purchasers
hereunder shall be several obligations, and not joint and several obligations.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement on the date first written above.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
--------------------------------------
Robert Shaw, Chief Executive Officer
and President
INTERPRISE TECHNOLOGY PARTNERS, L.P.
By: /s/ David R. Parker
--------------------------------------
David R. Parker, Managing Principal
-24-
<PAGE> 28
================================================================================
PURCHASE SCHEDULE
================================================================================
This Purchase Schedule relates to that certain Stock Purchase Agreement (the
"PURCHASE AGREEMENT"), dated as of November 11, 1999, by and between Interprise
Technology Partners, L.P. ("INTERPRISE") and World Commerce Online, Inc. (the
"COMPANY"), and sets forth the Purchasers and their respective amounts of the
Company's Series B Convertible Preferred Stock, par value $0.001 per share (the
"PREFERRED STOCK"). Pursuant to Section 1B(ii) of the Purchase Agreement, prior
to the Closing, Interprise may select and add Purchasers (and their respective
amounts) to this Purchase Schedule and may increase the amount of Interprise's
investment in the Purchase Schedule, provided that the maximum number of shares
of Preferred Stock in the Purchase Schedule shall be 5,000,000. Purchases of the
Preferred Stock shall be made subject to the terms and conditions set forth in
the Purchase Agreement. Numbers set forth in this Purchase Schedule shall be
equitably adjusted for subsequent stock splits, stock combinations, stock
dividends and recapitalizations.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PURCHASER NUMBER OF SHARES OF PREFERRED INVESTMENT IN SHARES OF PREFERRED STOCK
STOCK (FOR INTERPRISE, INCLUDING PRINCIPAL OF
BRIDGE LOAN TO BE CONVERTED AT CLOSING)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interprise 1,250,000 $5,000,000
- -------------------------------------------------------------------------------------------------------------------
[INSERT]
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
================================================================================
SCHEDULE OF EXCEPTIONS
================================================================================
5D: SUBSIDIARY; INVESTMENTS.
World Commerce Online - Floraplex, Inc., a Florida
corporation, is a wholly-owned subsidiary of the Company.
FPN (Fresh Products Network) B.V., a Dutch Company, is a
wholly-owned subsidiary of the Company.
World Commerce Online B.V., i.o., a Dutch Company being
registered, will be a wholly-owned subsidiary of the Company.
5G: LITIGATION, ETC.
The following lawsuits and/or judgments remain outstanding
against World Commerce Online - Floraplex, Inc., f/k/a World Commerce Online,
Inc., and f/k/a The Floral Foundation, Inc.
1. VISBEEN FLORAL BV, vs. THE FLORAL FOUNDATION, INC., (Orange
County) - Trade credit claim for $20,993.93 through October
17, 1996 plus interest. Suit filed but no adjudication. The
vendor has already received a significant payment from its
credit insurance company on this unpaid obligation.
2. AABLO BV AALSMEER, vs. THE FLORAL FOUNDATION, INC., (Orange
County) - Trade credit claim reduced to a judgment on March
14, 1997 in the amount of $10,728.62 plus interest. The vendor
has already received a significant payment from its credit
insurance company on this unpaid obligation.
3. HOLEX FLOWER BV, vs. THE FLORAL FOUNDATION, INC., (Orange
County) - Trade credit claim for $47,595.52 through December
31, 1997. Suit filed but no adjudication. Company paid the
balance due after the vendor received a credit insurance
payment for unpaid obligation.
5J: ERISA.
Company provides and pays 100% of the premiums for the
following benefits for employees, spouses, and children, through Team America,
its Professional Employer Organization (PEO):
<PAGE> 30
<TABLE>
<S> <C>
Health Insurance through: United Health Care - USA Policy No. 203318
P.O. Box 30555
Salt Lake City, Utah 84130
Tel: (877) 617-2273
Dental and Vision through: Ameritas Policy No. 385191
Group Claim Office
P.O. Box 82520
Lincoln, NE 68501
Tel: (800) 487-5553 (Dental)
Tel: (800) 255-4931 (Vision)
Life Insurance through: Guardian Policy No. G334759
Tel: (800) 627-4200
</TABLE>
Company also has established bonus plans for the following
employees:
Alex Middleton
Geno Valdes
Joanne Torres
Josh Leichter
Margie Carr
Marta Strickland
Mary Jo Williams
Mike Novelli
Peter Heath
Phillip Bogat
Rob Weber
Shawn Coker
<PAGE> 1
EXHIBIT 3.6
--------------------------------
CERTIFICATE OF DESIGNATIONS, POWERS, PREFERENCES AND RIGHTS
OF
SERIES B PREFERRED STOCK
OF
WORLD COMMERCE ONLINE, INC.
--------------------------------
World Commerce Online, Inc., a Delaware corporation (the
"CORPORATION"), in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors of
the Corporation by the Certificate of Incorporation (or an amendment thereto) of
the Corporation, the Board of Directors by unanimous written consent executed on
November 11, 1999, duly adopted the following resolution providing for the
issuance of a series of five million one hundred ten thousand (5,110,000) shares
of Preferred Stock, par value $0.001 per share, each to be designated "Series B
Preferred Stock":
RESOLVED, that, pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation
shall be designated Series B Preferred Stock which shall consist of five million
one hundred ten thousand (5,110,000) shares, par value of one-tenth of one cent
($0.001) per share, and each share shall have the following voting powers,
dividend rights, rights of redemption, conversion features and other powers,
preferences and rights:
SECTION 1. DIVIDENDS.
1.1A. GENERAL OBLIGATION. When and as declared by the Corporation's
Board of Directors and to the extent permitted under the General Corporation Law
of the State of Delaware, the Corporation shall pay dividends in cash to the
holders of the Series B Preferred Stock (the "SERIES B PREFERRED") and the
holders of the Series A Preferred Stock (the "SERIES A PREFERRED") (the Series A
Preferred and Series B Preferred are referred to together as the "SERIES A AND B
PREFERRED") pari passu and in preference to the holders of all other class of
stock of the Company, as provided in this SECTION 1. The date on which the
Corporation initially issues any share of Series B Preferred shall be deemed to
be its "DATE OF ISSUANCE" regardless of the number of times transfer of such
share is made on the stock records maintained by or for the Corporation and
regardless of the number of certificates which may be issued to evidence such
share.
1.1B. DISTRIBUTION OF PARTIAL DIVIDEND PAYMENTS. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Series A and B Preferred, such
payment shall be distributed ratably among the
<PAGE> 2
holders of the Series A and B Preferred Stock based on the dividend amount each
such holder is otherwise entitled to receive and the aggregate dividend amount
all such holders are otherwise entitled to receive.
SECTION 2. LIQUIDATION.
Upon any liquidation, dissolution or winding up of the Corporation
(whether voluntary or involuntary), each holder of Series A and B Preferred
shall be entitled to be paid, pari passu and before any distribution or payment
is made upon any Junior Securities, an amount in cash equal to the aggregate
Liquidation Value of all shares of Series A and B Preferred held by such holder
(plus all accrued and unpaid dividends thereon), and the holders of Series A and
B Preferred shall not be entitled to any further payment, except as set forth
below. If upon any such liquidation, dissolution or winding up of the
Corporation the Corporation's assets to be distributed among the holders of the
Series A and B Preferred are insufficient to permit payment to such holders of
the aggregate amount which they are entitled to be paid under this SECTION 2,
then the entire assets available to be distributed to the Corporation's
stockholders shall be distributed ratably among such holders based on the
Liquidation Value (plus all accrued and unpaid dividends) of the Series A and B
Preferred held by each such holder and the aggregate Liquidation Value (plus all
accrued and unpaid dividends) of the Series A and B Preferred held by all such
holders. Prior to the liquidation, dissolution or winding up of the Corporation,
the Corporation shall declare for payment all accrued and unpaid dividends with
respect to the Series B Preferred, but only to the extent of funds of the
Corporation legally available for the payment of dividends. Not less than sixty
(60) days prior to the payment date stated therein, the Corporation shall mail
written notice of any such liquidation, dissolution or winding up to each record
holder of Series B Preferred, setting forth in reasonable detail the amount of
proceeds to be paid with respect to each share of Series B Preferred and each
share of Common Stock in connection with such liquidation, dissolution or
winding up. In addition to and after payment in full of all other amounts
payable to the holders of the Series B Preferred under this SECTION 2, upon any
liquidation, dissolution or winding up of the Corporation (whether voluntary or
involuntary), the holders of the Series B Preferred shall be entitled to
participate on an as if converted basis with the holders of Common Stock as a
single class in the distribution of assets of the Corporation with respect to
the Common Stock.
SECTION 3. PRIORITY OF SERIES B PREFERRED ON DIVIDENDS AND REDEMPTIONS.
So long as any Series B Preferred remains outstanding, without the
prior written consent of the holders of a majority of the outstanding shares of
Series B Preferred, the Corporation shall not, nor shall it permit any
Subsidiary to, redeem, purchase or otherwise acquire directly or indirectly any
Series A Preferred or Junior Securities, nor shall the Corporation directly or
indirectly pay or declare any dividend or make any distribution upon any Series
A Preferred or Junior Securities.
SECTION 4. REDEMPTIONS.
4.1A. REDEMPTION PAYMENTS. For each share of Series B Preferred which
is to be redeemed hereunder, the Corporation shall be obligated on the
Redemption Date to pay to the holder thereof (upon surrender by such holder at
the Corporation's principal office of the certificate
2
<PAGE> 3
representing such share) an amount in cash equal to the Liquidation Value of
such share (plus all accrued and unpaid dividends thereon). If the funds of the
Corporation legally available for redemption of shares of Series A Preferred or
Series B Preferred on any Redemption Date are insufficient to redeem the total
number of shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of shares of
Series A and B Preferred ratably among the holders of the shares of Series A and
B Preferred to be redeemed based upon the Liquidation Value of such shares held
by each such holder (plus all accrued and unpaid dividends thereon). At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series A and B Preferred, such funds shall
immediately be used to redeem the balance of the shares of Series A and B
Preferred which the Corporation has become obligated to redeem on any Redemption
Date but which it has not redeemed. Prior to any redemption of Series B
Preferred, the Corporation shall declare for payment all accrued and unpaid
dividends with respect to the shares which are to be redeemed, but only to the
extent of funds of the Corporation legally available for the payment of
dividends.
4.1B. DETERMINATION OF THE NUMBER OF EACH HOLDER'S SHARES TO BE
REDEEMED. Except as otherwise provided herein, the number of shares of Series B
Preferred to be redeemed from each holder thereof in redemptions hereunder shall
be the number of shares determined by multiplying the total number of shares of
Series A and B Preferred to be redeemed times a fraction, the numerator of which
shall be the total number of shares of Series A and B Preferred then held by
such holder and the denominator of which shall be the total number of Series A
and B Preferred Shares then outstanding.
4.1C. DIVIDENDS AFTER REDEMPTION DATE. No share of Series B Preferred
shall be entitled to any dividends accruing after the date on which the
Liquidation Value of such share (plus all accrued and unpaid dividends thereon)
is paid to the holder of such share. On such date, all rights of the holder of
such share of Series B Preferred shall cease, and such share shall no longer be
deemed to be issued and outstanding.
4.1D. REDEEMED OR OTHERWISE ACQUIRED SHARES. Any shares of Series B
Preferred which are redeemed or otherwise acquired by the Corporation shall be
canceled and retired to authorized but unissued shares and shall not be
reissued, sold or transferred.
4.1E. PAYMENT OF ACCRUED DIVIDENDS. The Corporation may not redeem any
Series B Preferred, unless all dividends accrued on the outstanding Series B
Preferred through the date of such redemption have been declared and paid in
full.
4.1F. SPECIAL REDEMPTIONS.
(I) If a Change in Ownership has occurred or the Corporation
obtains knowledge that a Change in Ownership is proposed to occur, the
Corporation shall give prompt written notice of such Change in Ownership
describing in reasonable detail the material terms and date of consummation
thereof to each holder of Series B Preferred, but in any event such notice shall
not be given later than ten (10) days after the occurrence of such Change in
Ownership, and the Corporation shall give each holder of Series B Preferred
prompt written notice of any material
3
<PAGE> 4
change in the terms or timing of such transaction. The holder or holders of a
majority of the Series A and B Preferred then outstanding may require the
Corporation to redeem all or any portion of the Series A and B Preferred owned
by such holder or holders at a price per share equal to the Liquidation Value
thereof (plus all accrued and unpaid dividends thereon) by giving written notice
to the Corporation of such election prior to the later of: (a) twenty-one (21)
days after receipt of the Corporation's notice; or (b) five (5) days prior to
the consummation of the Change in Ownership (the "EXPIRATION DATE"). The
Corporation shall give prompt written notice of any such election to all other
holders of Series B Preferred within five (5) days after the receipt thereof,
and each such holder shall have until the later of: (a) the Expiration Date; or
(b) ten (10) days after receipt of such second notice to request redemption
hereunder (by giving written notice to the Corporation) of all or any portion of
the Series B Preferred owned by such holder.
Upon receipt of such election(s), the Corporation shall be
obligated to redeem the aggregate number of shares of Series A and B Preferred
specified therein on the later of: (a) the occurrence of the Change in
Ownership; or (b) five (5) days after the Corporation's receipt of such
election(s). If any proposed Change in Ownership does not occur, all requests
for redemption in connection therewith shall be automatically rescinded, or if
there has been a material change in the terms or the timing of the transaction,
any holder of Series B Preferred may rescind such holder's request for
redemption by giving written notice of such rescission to the Corporation.
The term "CHANGE IN OWNERSHIP" means any sale, transfer or
issuance or series of sales, transfers and/or issuances of shares of the
Corporation's capital stock by the Corporation or any holders thereof which
results in any Person or group of Persons (as the term "group" is used under the
Securities Exchange Act of 1934), other than the holders of Common Stock as of
the date of the Purchase Agreement, owning capital stock of the Corporation
possessing the voting power (under ordinary circumstances) to elect a majority
of the Corporation's Board of Directors.
(ii) If a Fundamental Change is proposed to occur, the
Corporation shall give written notice of such Fundamental Change describing in
reasonable detail the material terms and date of consummation thereof to each
holder of Series B Preferred not more than forty-five (45) days nor less than
twenty (20) days prior to the consummation of such Fundamental Change, and the
Corporation shall give each holder of Series B Preferred prompt written notice
of any material change in the terms or timing of such transaction. The holder or
holders of a majority of the Series A and B Preferred then outstanding may
require the Corporation to redeem all or any portion of the Series A and B
Preferred owned by such holder or holders at a price per share equal to the
Liquidation Value thereof (plus all accrued and unpaid dividends thereon) by
giving written notice to the Corporation of such election prior to the later of:
(a) ten (10) days prior to the consummation of the Fundamental Change; or (b)
ten (10) days after receipt of notice from the Corporation. The Corporation
shall give prompt written notice of such election to all other holders of Series
B Preferred (but in any event within five (5) days prior to the consummation of
the Fundamental Change), and each such holder shall have until two (2) days
after the receipt of such notice to request redemption (by written notice given
to the Corporation) of all or any portion of the Series B Preferred owned by
such holder.
4
<PAGE> 5
Upon receipt of such election(s), the Corporation shall be
obligated to redeem the aggregate number of shares of Series A and B Preferred
specified therein upon the consummation of such Fundamental Change. If any
proposed Fundamental Change does not occur, all requests for redemption in
connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Series B Preferred may rescind such holder's request for redemption by
delivering written notice thereof to the Corporation prior to the consummation
of the transaction.
The term "FUNDAMENTAL CHANGE" means: (a) any sale or transfer
of more than fifty percent (50%) of the assets of the Corporation and its
Subsidiaries on a consolidated basis (measured either by book value in
accordance with generally accepted accounting principles consistently applied or
by fair market value determined in the reasonable good faith judgment of the
Corporation's Board of Directors) in any transaction or series of transactions
(other than sales in the ordinary course of business); and (b) any merger or
consolidation to which the Corporation is a party, except for a merger in which
the Corporation is the surviving corporation, the terms of the Series A
Preferred and the Series B Preferred are not changed and neither the Series A
Preferred nor the Series B Preferred is exchanged for cash, securities or other
property, and after giving effect to such merger, the holders of the
Corporation's outstanding capital stock possessing a majority of the voting
power (under ordinary circumstances) to elect a majority of the Corporation's
Board of Directors immediately prior to the merger shall continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's Board of
Directors.
4.1G. REDEMPTIONS UPON REQUEST. At any time after April 1, 2001, the
holders of a majority of the outstanding Series A and B Preferred may request
redemption of all of their shares of Series A and B Preferred by delivering
written notice of such request to the Corporation. Within five (5) days after
receipt of such request, the Corporation shall give written notice of such
request to all other holders of Series B Preferred, and such other holders may
request redemption of their shares of Series B Preferred by delivering written
notice to the Corporation within ten (10) days after receipt of the
Corporation's notice. The Corporation shall be required to redeem all shares
share of Series A and B Preferred with respect to which such redemption requests
have been made at a price per share equal to the Liquidation Value thereof (plus
all accrued and unpaid dividends thereon) within twenty (20) days after receipt
of the initial redemption request.
SECTION 5. VOTING RIGHTS.
5.1A. ELECTION OF DIRECTORS. In the election of directors of the
Corporation, the holders of the Series B Preferred, voting separately as a
single class to the exclusion of all other classes of the Corporation's capital
stock and with each share of Series B Preferred entitled to one vote, shall be
entitled to elect one (1) director to serve on the Corporation's Board of
Directors until his successor is duly elected by the holders of the Series B
Preferred or he is removed from office by the holders of the Series B Preferred.
At such time as no shares of Series B Preferred are outstanding, any director in
office elected solely by the holders of the Series B Preferred voting separately
as a class shall remain as a member of the Board, until such time as his
successor shall be duly elected by the stockholders of the Corporation then
entitled to vote for all directors. If the holders of the Series B
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Preferred for any reason fail to elect anyone to fill any such directorship,
such position shall remain vacant until such time as the holders of the Series B
Preferred elect a director to fill such position and shall not be filled by
resolution or vote of the Corporation's Board of Directors or the Corporation's
other stockholders. In order to protect the representation on the Board of
Directors granted to the holders of the Series B Preferred, any expansion of the
number of directors constituting the Board of Directors beyond five (5) members,
shall require, in addition to any other voting requirement set forth in the
Articles of Incorporation, the vote of a majority of the Series B Preferred
issued and outstanding, voting separately as a single class to the exclusion of
all other classes of the Corporation's capital stock and with each share of
Series B Preferred entitled to one vote.
5.1B. OTHER VOTING RIGHTS. The holders of the Series B Preferred shall
be entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and except in the election of directors and as otherwise
required by applicable law, the holders of the Series B Preferred shall be
entitled to vote on all matters submitted to the stockholders for a vote
together with the holders of the Common Stock voting together as a single class
with each share of Common Stock entitled to one vote per share and each share of
Series B Preferred entitled to one vote for each share of Common Stock issuable
upon conversion of the Series B Preferred as of the record date for such vote
or, if no record date is specified, as of the date of such vote.
SECTION 6. CONVERSION.
6.1A. CONVERSION PROCEDURE.
(i) At any time and from time to time, any holder of Series B
Preferred may convert all or any portion of the Series B Preferred (including
any fraction of a share) held by such holder into a number of shares of
Conversion Stock computed by multiplying the number of shares of Series B
Preferred to be converted by $4.00 and dividing the result by the Conversion
Price then in effect.
(ii) Except as otherwise provided herein, each conversion of
Series B Preferred shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing the
Series B Preferred to be converted have been surrendered for conversion at the
principal office of the Corporation. At the time any such conversion has been
effected, the rights of the holder of the Shares converted as a holder of Series
B Preferred shall cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
(iii) The conversion rights of any share of Series B Preferred
subject to redemption hereunder shall terminate on the Redemption Date for such
share unless the Corporation has failed to pay to the holder thereof the
Liquidation Value of such share (plus all accrued and unpaid dividends thereon
and any premium payable with respect thereto).
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(iv) Notwithstanding any other provision hereof, if a
conversion of Series B Preferred is to be made in connection with a Public
Offering, a Change in Ownership, a Fundamental Change or other transaction
affecting the Corporation, the conversion of any shares of Series B Preferred
may, at the election of the holder thereof, be conditioned upon the consummation
of such transaction, in which case such conversion shall not be deemed to be
effective until such transaction has been consummated.
(v) As soon as possible after a conversion has been effected
(but in any event within five (5) business days in the case of SUBPARAGRAPH (A)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such conversion in
such name or names and such denomination or denominations as the converting
holder has specified;
(b) payment in an amount equal to all accrued
dividends with respect to each share of Series B Preferred converted which have
not been paid prior thereto, plus the amount payable under SUBPARAGRAPH (X)
below with respect to such conversion; and
(c) a certificate representing any shares of Series B
Preferred which were represented by the certificate or certificates delivered to
the Corporation in connection with such conversion but which were not converted.
(vi) If for any reason the Corporation is unable to pay any
portion of the accrued and unpaid dividends on Series B Preferred being
converted, such dividends may, at the converting holder's option, be converted
into an additional number of shares of Conversion Stock determined by dividing
the amount of the unpaid dividends to be applied for such purpose, by the
Conversion Price then in effect.
(vii) The issuance of certificates for shares of Conversion
Stock upon conversion of Series B Preferred shall be made without charge to the
holders of such Series B Preferred for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion and
the related issuance of shares of Conversion Stock. Upon conversion of each
share of Series B Preferred, the Corporation shall take all such actions as are
necessary in order to insure that the Conversion Stock issuable with respect to
such conversion shall be validly issued, fully paid and nonassessable, free and
clear of all taxes, liens, charges and encumbrances with respect to the issuance
thereof.
(viii) The Corporation shall not close its books against the
transfer of Series B Preferred or of Conversion Stock issued or issuable upon
conversion of Series B Preferred in any manner which interferes with the timely
conversion of Series B Preferred. The Corporation shall assist and cooperate
with any holder of shares of Series B Preferred required to make any
governmental filings or obtain any governmental approval prior to or in
connection with any conversion of shares of Series B Preferred hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
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(ix) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Conversion Stock, solely
for the purpose of issuance upon the conversion of the Series B Preferred, such
number of shares of Conversion Stock issuable upon the conversion of all
outstanding Series B Preferred. All shares of Conversion Stock which are so
issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Conversion Stock may be listed (except for official notice
of issuance which shall be immediately delivered by the Corporation upon each
such issuance). The Corporation shall not take any action which would cause the
number of authorized but unissued shares of Conversion Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon
conversion of the Series B Preferred.
(x) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be delivered upon any
conversion of the Series B Preferred, the Corporation, in lieu of delivering the
fractional share therefor, shall pay an amount to the holder thereof equal to
the Market Price of such fractional interest as of the date of conversion.
(xi) If the shares of Conversion Stock issuable by reason of
conversion of Series B Preferred are convertible into or exchangeable for any
other stock or securities of the Corporation, the Corporation shall, at the
converting holder's option, upon surrender of the shares to be converted by such
holder as provided herein together with any notice, statement or payment
required to effect such conversion or exchange of Conversion Stock, deliver to
such holder or as otherwise specified by such holder a certificate or
certificates representing the stock or securities into which the shares of
Conversion Stock issuable by reason of such conversion are so convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as such holder has specified.
6.1B. CONVERSION PRICE.
(i) The initial Conversion Price shall be $4.00. In order to
prevent dilution of the conversion rights granted under this SECTION 6, the
Conversion Price shall be subject to adjustment from time to time pursuant to
this PARAGRAPH 6.1B.
(ii) If and whenever on or after the original date of issuance
of the Series B Preferred the Corporation issues or sells, or in accordance with
PARAGRAPH 6.1C is deemed to have issued or sold, any share of Common Stock (the
"DILUTIVE SECURITIES") for a consideration per share less than the Conversion
Price in effect immediately prior to such time, then immediately upon such issue
or sale or deemed issue or sale the Conversion Price shall be reduced to an
amount equal to the existing Conversion Price multiplied by a fraction (i) the
numerator of which is the sum of (A) the total number of shares of Common Stock
issued and outstanding (treating the Series A and B Preferred Stock on an as
converted to Common Stock basis) plus (B) the number of Dilutive Securities that
can be purchased at the existing Conversion Price for the total
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consideration received for the issuance of the Dilutive Securities and (ii) the
denominator of which is the number of outstanding shares of Common Stock
(treating the Series A and B Preferred Stock on an as converted to Common Stock
basis), plus the number of Dilutive Securities issued or deemed issued in the
new issuance. Notwithstanding anything to the contrary contained in PARAGRAPH
6.1C, the Conversion price shall never be increased above $4.00, as adjusted
pursuant to PARAGRAPH 6.1D.
(iii) Notwithstanding the foregoing, there shall be no
adjustment to the Conversion Price hereunder with respect to (a) the granting of
stock options, with an exercise price per share of not less than $1.80 (as
equitably adjusted for subsequent stock splits, stock combinations, stock
dividends and recapitalizations and such number shall include all stock options
outstanding as of the date of the Purchase Agreement), pursuant to a plan
adopted by the Corporation's board of directors, to employees or directors of,
or consultants to, the Corporation and its Subsidiaries or the exercise thereof
for an aggregate of 2,277,750 shares of Common Stock (as such number of shares
is equitably adjusted for subsequent stock splits, stock combinations, stock
dividends and recapitalizations and such number shall include all stock options
outstanding as of the date of the Purchase Agreement), or (b) the issuance of up
to 250,000 shares of Series A Preferred Stock., par value $0.001 per share,
pursuant to Section 1B(iii) of the March 1999 Purchase Agreement at a price per
share of $2.00 (as equitably adjusted for subsequent stock splits, stock
combinations, stock dividends and recapitalizations).
6.1C. EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS: DEEMED ISSUANCES.
For purposes of determining the adjusted Conversion Price under PARAGRAPH 6.1B,
the following shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any
manner grants or sells any Option and the lowest price per share for which any
one share of Common Stock is issuable upon the exercise of any such Option, or
upon conversion or exchange of any Convertible Security issuable upon exercise
of any such Option, is less than the Conversion Price in effect immediately
prior to the time of the granting or sale of such Option, then such share of
Common Stock shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such Option for such
price per share. For purposes of this paragraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the granting or
sale of the Option, upon exercise of the Option and upon conversion or exchange
of any Convertible Security issuable upon exercise of such Option. No further
adjustment of the Conversion Price shall be made upon the actual issue of such
Common Stock or such Convertible Security upon the exercise of such Options or
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Security.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in
any manner issues or sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion or
exchange thereof is less than the Conversion Price in effect immediately prior
to the time of such issue or sale, then such share of Common Stock shall
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be deemed to be outstanding and to have been issued and sold by the Corporation
at the time of the issuance or sale of such Convertible Securities for such
price per share. For the purposes of this paragraph, the "lowest price per share
for which any one share of Common Stock is issuable" shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the issuance or
sale of the Convertible Security and upon the conversion or exchange of such
Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or exchange of
any Convertible Security, and if any such issue or sale of such Convertible
Security is made upon exercise of any Options for which adjustments of the
Conversion Price had been or are to be made pursuant to other provisions of this
SECTION 6, no further adjustment of the Conversion Price shall be made by reason
of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Option, the additional consideration (if any)
payable upon the issue, conversion or exchange of any Convertible Security or
the rate at which any Convertible Security is convertible into or exchangeable
for Common Stock changes at any time, the Conversion Price in effect at the time
of such change shall be adjusted immediately to the Conversion Price which would
have been in effect at such time had such Option or Convertible Security
originally provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued or
sold; PROVIDED THAT if such adjustment of the Conversion Price would result in
an increase in the Conversion Price then in effect, such adjustment shall not be
effective until thirty (30) days after written notice thereof has been given to
all holders of the Series B Preferred, and PROVIDED FURTHER THAT, if such
adjustment would result in an increase in the Conversion Price, such adjustment
shall only be effective if no shares of Common Stock had theretofore been issued
with respect to such Options or Convertible Securities. For purposes of
PARAGRAPH 6.1C, if the terms of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series B Preferred are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change; PROVIDED THAT no such change shall at any time cause the
Conversion Price hereunder to be increased.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or termination,
never been issued; PROVIDED THAT if such expiration or termination would result
in an increase in the Conversion Price then in effect, such increase shall not
be effective until thirty (30) days after written notice thereof has been given
to all holders of the Series B Preferred. For purposes of PARAGRAPH 6.1C, the
expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series B Preferred shall not cause
the Conversion Price hereunder to be adjusted unless, and only to the extent
that, a change in the terms of such Option or Convertible Security caused it to
be deemed to have been issued after the date of issuance of the Series B
Preferred.
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(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor (net of discounts,
commissions and related expenses). If any Common Stock, Option or Convertible
Security is issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation shall be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Corporation shall be the Market Price thereof as of the date of receipt. If any
Common Stock, Option or Convertible Security is issued to the owners of the
non-surviving entity in connection with any merger in which the Corporation is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Option or
Convertible Security, as the case may be. The fair value of any consideration
other than cash and securities shall be determined jointly by the Corporation
and the holders of a majority of the outstanding Series B Preferred. If such
parties are unable to reach agreement within a reasonable period of time, the
fair value of such consideration shall be determined by an independent appraiser
experienced in valuing such type of consideration jointly selected by the
Corporation and the holders of a majority of the outstanding Series B Preferred.
The determination of such appraiser shall be final and binding upon the parties,
and the fees and expenses of such appraiser shall be borne by the Corporation.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of $.001.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) RECORD DATE. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them: (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities; or (b) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or upon the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
6.1D. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
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outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
6.1E. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "ORGANIC CHANGE". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance reasonably satisfactory to the holders of a
majority of the Series B Preferred then outstanding) to insure that each of the
holders of Series B Preferred shall thereafter have the right to acquire and
receive, in lieu of or in addition to (as the case may be) the shares of
Conversion Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series B Preferred, such shares of stock, securities
or assets as such holder would have received in connection with such Organic
Change if such holder had converted its Series B Preferred immediately prior to
such Organic Change. In each such case, the Corporation shall also make
appropriate provisions (in form and substance reasonably satisfactory to the
holders of a majority of the Series B Preferred then outstanding) to insure that
the provisions of this SECTION 6 and SECTIONS 7 and 8 hereof shall thereafter be
applicable to the Series B Preferred (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Corporation, an immediate adjustment of the Conversion Price
to the value for the Common Stock reflected by the terms of such consolidation,
merger or sale, and a corresponding immediate adjustment in the number of shares
of Conversion Stock acquirable and receivable upon conversion of Series B
Preferred, if the value so reflected is less than the Conversion Price in effect
immediately prior to such consolidation, merger or sale). The Corporation shall
not effect any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor entity (if other than the Corporation)
resulting from consolidation or merger or the entity purchasing such assets
assumes by written instrument (in form and substance satisfactory to the holders
of a majority of the Series B Preferred then outstanding), the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
6.1F. CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of this SECTION 6 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors shall make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of Series B
Preferred; PROVIDED THAT no such adjustment shall increase the Conversion Price
as otherwise determined pursuant to this SECTION 6 or decrease the number of
shares of Conversion Stock issuable upon conversion of each share of Series B
Preferred.
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6.1G. NOTICES.
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Series B
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders
of Series B Preferred at least twenty (20) days prior to the date on which the
Corporation closes its books or takes a record: (a) with respect to any dividend
or distribution upon Common Stock; (b) with respect to any pro rata subscription
offer to holders of Common Stock; or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the
holders of Series B Preferred at least twenty (20) days prior to the date on
which any Organic Change shall take place.
6.1H. MANDATORY CONVERSION. The Corporation may at any time require the
conversion of all of the outstanding Series B Preferred if the Corporation is at
such time effecting a firm commitment underwritten Public Offering of shares of
its Common Stock in which: (i) the aggregate price paid by the public for the
shares shall be at least $15,000,000; (ii) the price per share paid by the
public for such shares shall be at least three hundred percent (300%) of the
Conversion Price in effect immediately prior to the closing of the sale of such
shares pursuant to the Public Offering, and; (iii) the holders of the Series B
Preferred are permitted to include and sell in such public offering, as a
Piggyback Registration under the Registration Agreement, subject to reduction in
the number of such shares to be sold due to underwriting limitations, all
Registrable Securities (as defined in the Registration Agreement). Any such
mandatory conversion shall only be effected at the time of and subject to the
closing of the sale of such shares pursuant to such Public Offering and upon
written notice of such mandatory conversion delivered to all holders of Series B
Preferred at least seven (7) days prior to such closing.
SECTION 7. LIQUIDATING DIVIDENDS.
If the Corporation declares or pays a dividend upon the Common Stock
payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a "LIQUIDATING
DIVIDEND"), then the Corporation shall pay to the holders of Series B Preferred
at the time of payment thereof the Liquidating Dividends which would have been
paid on the shares of Conversion Stock had such Series B Preferred been
converted immediately prior to the date on which a record is taken for such
Liquidating Dividend, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
SECTION 8. PURCHASE RIGHTS.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any
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class of Common Stock (the "PURCHASE RIGHTS"), then each holder of Series B
Preferred shall be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Conversion Stock
acquirable upon conversion of such holder's Series B Preferred immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.
SECTION 9. EVENTS OF NONCOMPLIANCE.
9.1A. DEFINITION. If any of the following shall have occurred and the
Corporation shall have received notice from any holder of Series B Preferred, an
Event of Noncompliance shall have occurred:
(i) the Corporation fails to pay on any date of payment for
any dividend the full amount of dividends then accrued on the Series B
Preferred, whether or not such payment is legally permissible or is prohibited
by any agreement to which the Corporation is subject;
(ii) the Corporation fails to make any redemption payment with
respect to the Series B Preferred which it is required to make hereunder,
whether or not such payment is legally permissible or is prohibited by any
agreement to which the Corporation is subject;
(iii) the Corporation breaches or otherwise fails to perform
or observe any other material covenant or material agreement set forth herein or
in the Purchase Agreement or in any other agreement between any Series B
Preferred holder and the Corporation, and the Corporation continues to do so for
thirty (30) days;
(iv) any material representation or material warranty
contained in the Purchase Agreement or required to be furnished to any holder of
Series B Preferred pursuant to the Purchase Agreement or any other agreement
between any Series B Holder and the Corporation, or any information contained in
writing furnished by the Corporation or any Subsidiary to any holder of Series B
Preferred, is false or misleading in any material respect on the date made or
furnished;
(v) the Corporation or any Subsidiary makes an assignment for
the benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Corporation or any Subsidiary bankrupt or insolvent; or any
order for relief with respect to the Corporation or any Subsidiary is entered
under the Federal Bankruptcy Code; or the Corporation or any Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the Corporation or any Subsidiary or of any
substantial part of the assets of the Corporation or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Corporation or any Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction; or any such petition
or application is filed, or any such proceeding is commenced, against the
Corporation or any Subsidiary and either (a) the Corporation or any such
Subsidiary by any act indicates its
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approval thereof, consent thereto or acquiescence therein or (b) such petition,
application or proceeding is not dismissed within sixty (60) days;
(vi) a judgment in excess of $100,000 is rendered against the
Corporation or any Subsidiary and, within sixty (60) days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal, or
within sixty (60) days after the expiration of any such stay, such judgment is
not discharged;
(vii) the Corporation or any Subsidiary defaults in the
performance of any obligation or agreement if the effect of such default is to
cause an amount exceeding $100,000 to become due prior to its stated maturity or
to permit the holder or holders of any obligation to cause an amount exceeding
$100,000 to become due prior to its stated maturity and the Corporation makes
payment of any portion of such amount, the Corporation admits or confesses that
such amount is due, or a judgment is entered reflecting that such amount is due;
(viii) the Corporation or any Subsidiary defaults in the
performance of any covenant or agreement under any credit facility with
indebtedness greater than $100,000 that is not cured or waived within ninety
(90) days; or
(ix) the Corporation's chief executive officer or chief
financial officer (as of the date of the Purchase Agreement or closing thereof)
shall cease to be employed by the Corporation for any reason and is not replaced
within 120 days by the approval of a majority of the Board of Directors,
including the director elected pursuant to SECTION 5.1A, if any.
9.1B. CONSEQUENCES OF EVENTS OF NONCOMPLIANCE.
(i) If an Event of Noncompliance of the type described in
SUBPARAGRAPH 9.1A(III) has occurred and continued for a period of thirty (30)
days or any other Event of Noncompliance has occurred and is continuing, the
Series B Preferred shall immediately be entitled a dividend accruing daily at
the rate of ten percent (10%) per annum, which shall be declared payable by the
Board of Directors quarterly following the date of the Event of Noncompliance.
Thereafter, until such time as no Event of Noncompliance exists, the dividend
rate shall increase automatically at the end of each succeeding 90-day period by
an additional increment of two (2) percentage point(s) (but in no event shall
the dividend rate exceed fourteen percent (14%)). Any increase of the dividend
rate resulting from the operation of this subparagraph shall terminate as of the
close of business on the date on which no Event of Noncompliance exists, subject
to subsequent increases pursuant to this paragraph.
(ii) If an Event of Noncompliance of the type described in
SUBPARAGRAPH 9.1A(III) has occurred and continued for a period of thirty (30)
days or any other Event of Noncompliance has occurred and is continuing, the
holder or holders of a majority of the Series B Preferred then outstanding may
demand (by written notice delivered to the Corporation) immediate redemption of
all or any portion of the Series B Preferred owned by such holder or holders at
a price per share equal to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon). The Corporation shall give prompt written notice of
such election to the other holders of
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Series B Preferred (but in any event within five (5) days after receipt of the
initial demand for redemption), and each such other holder may demand immediate
redemption of all or any portion of such holder's Series B Preferred by giving
written notice thereof to the Corporation within seven days after receipt of the
Corporation's notice. The Corporation shall redeem all Series B Preferred as to
which rights under this paragraph have been exercised within fifteen (15) days
after receipt of the initial demand for redemption.
(iii) If an Event of Noncompliance of the type described in
SUBPARAGRAPH 9.1A(V) has occurred, all of the Series B Preferred then
outstanding shall be subject to immediate redemption by the Corporation (without
any action on the part of the holders of the Series B Preferred) at a price per
share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon). The Corporation shall immediately redeem all Series B
Preferred upon the occurrence of such Event of Noncompliance.
(iv) If any Event or Events of Noncompliance exist for an
aggregate of ninety (90) days (whether or not such days are consecutive), the
Conversion Price of the Series B Preferred shall be reduced immediately by ten
percent (10%) of the Conversion Price in effect immediately prior to such
adjustment (the "FIRST ADJUSTMENT"). If any Event or Events of Noncompliance
exist for an aggregate of (90) days after the First Adjustment (whether or not
such days are consecutive and whether or not such days immediately follow the
First Adjustment), the Conversion Price shall be reduced immediately by ten
percent (10%) of what the Conversion Price would have been immediately prior to
such adjustment if the First Adjustment had not been made (the "SECOND
ADJUSTMENT"). If any Event or Events of Noncompliance exist for an aggregate of
(90) days after the Second Adjustment (whether or not such days are consecutive
and whether or not such days immediately follow the Second Adjustment), the
Conversion Price shall be reduced immediately by ten percent (10%) of what the
Conversion Price would have been immediately prior to such adjustment if the
First and Second Adjustments had not been made. In no event shall any Conversion
Price adjustment be rescinded, and in no event shall there be more than three
(3) Conversion Price adjustments pursuant to this subparagraph.
For example, assume that the Conversion Price of the
Series B Preferred is $4.00. If Events of Noncompliance are in existence for an
aggregate of ninety (90) days, the Conversion Price would be reduced immediately
by ten percent (10%) of $4.00, or $.40, for a new Conversion Price of $3.60. If
Events of Noncompliance exist for an additional ninety (90) days, the existing
Conversion Price would be reduced by ten percent (10%) of what the Conversion
Price would have been if there had been no previous adjustment pursuant to this
paragraph (i.e., $4.00), or $.40, for a new Conversion Price of $3.20. Then
assume that there is a two-for-one stock split, in which case the Conversion
Price would be decreased hereunder from $3.20 to $1.60, and assume that Events
of Noncompliance exist for an additional ninety (90) days. In this case, the
Conversion Price would be reduced by ten percent (10%) of what the Conversion
Price would have been immediately prior to such adjustment if there had been no
previous adjustments pursuant to this paragraph (i.e. $2.00), or $.20, for a new
Conversion Price of $1.40.
(v) If any Event of Noncompliance of the type described in
SUBPARAGRAPH 9.1A(III) has occurred and has continued for sixty (60) days or any
other Event of
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Noncompliance has occurred and is continuing, the number of directors
constituting the Corporation's board of directors shall, at the request of the
holder or holders of a majority of the Series A and B Preferred then
outstanding, be increased by such number which shall constitute a minimum
majority of the Board of Directors, and the holders of Series A and B Preferred
shall have the special right, voting separately as a single class (with each
share of Series A and B Preferred being entitled to one vote) and to the
exclusion of all other classes of the Corporation's stock, to elect individuals
to fill such newly created directorships, to remove any individuals elected to
such directorships and to fill any vacancies in such directorships. The special
right of the holders of Series A and B Preferred to elect members of the Board
of Directors may be exercised at the special meeting called pursuant to this
SUBPARAGRAPH (V), at any annual or other special meeting of stockholders and, to
the extent and in the manner permitted by applicable law, pursuant to a written
consent in lieu of a stockholders meeting. Such special right shall continue
until such time as there is no longer any Event of Noncompliance in existence,
at which time such special right shall terminate subject to revesting upon the
occurrence and continuation of any Event of Noncompliance which gives rise to
such special right hereunder.
At any time when such special right has vested in the
holders of Series A and B Preferred, a proper officer of the Corporation shall,
upon the written request of the holder of at least ten percent (10%) of the
Series A and B Preferred then outstanding, addressed to the secretary of the
Corporation, call a special meeting of the holders of Series A and B Preferred
for the purpose of electing directors pursuant to this subparagraph. Such
meeting shall be held at the earliest legally permissible date at the principal
office of the Corporation, or at such other place designated by the holders of
at least ten percent (10%) of the Series A and B Preferred then outstanding. If
such meeting has not been called by a proper officer of the Corporation within
ten (10) days after personal service of such written request upon the secretary
of the Corporation or within twenty (20) days after mailing the same to the
secretary of the Corporation at its principal office, then the holders of at
least ten percent (10%) of the Series A and B Preferred then outstanding may
designate in writing one of their number to call such meeting at the expense of
the Corporation, and such meeting may be called by such Person so designated
upon the notice required for annual meetings of stockholders and shall be held
at the Corporation's principal office, or at such other place designated by the
holders of at least 10% of the Series A and B Preferred then outstanding. Any
holder of Series A and B Preferred so designated shall be given access to the
stock record books of the Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to this subparagraph.
At any meeting or at any adjournment thereof at which
the holders of Series A and B Preferred have the special right to elect
directors, the presence, in person or by proxy, of the holders of a majority of
the Series A and B Preferred then outstanding shall be required to constitute a
quorum for the election or removal of any director by the holders of the Series
A and B Preferred exercising such special right. The vote of a majority of such
quorum shall be required to elect or remove any such director.
Any director so elected by the holders of Series A
and B Preferred shall continue to serve as a director until the expiration of
the lesser of: (a) a period of six (6) months following the date on which there
is not longer any Event of Noncompliance in existence; or (b) the
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remaining period of the full term for which such director has been elected.
After the expiration of such six (6) month period or when the full term for
which such director has been elected ceases (provided that the special right to
elect directors has terminated), as the case may be, the number of directors
constituting the board of directors of the Corporation shall decrease to such
number as constituted the whole board of directors of the Corporation
immediately prior to the occurrence of the Event or Events of Noncompliance
giving rise to the special right to elect directors.
(vi) If any Event of Noncompliance exists, each holder of
Series B Preferred shall also have any other rights which such holder is
entitled to under any contract or agreement at any time and any other rights
which such holder may have pursuant to applicable law.
SECTION 10. REGISTRATION OF TRANSFER.
The Corporation shall keep at its principal office a register for the
registration of Series B Preferred. Upon the surrender of any certificate
representing Series B Preferred at such place, the Corporation shall, at the
request of the record holder of such certificate, execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Series B Preferred
represented by such new certificate from the date to which dividends have been
fully paid on such Series B Preferred represented by the surrendered
certificate.
SECTION 11. REPLACEMENT.
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing shares
of Series B Preferred, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Corporation (provided
that if the holder is a financial institution or other institutional investor
its own agreement shall be satisfactory), or, in the case of any such mutilation
upon surrender of such certificate, the Corporation shall (at its expense)
execute and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue on the
Series B Preferred represented by such new certificate from the date to which
dividends have been fully paid on such lost, stolen, destroyed or mutilated
certificate.
SECTION 12. DEFINITIONS.
"CHANGE IN OWNERSHIP" has the meaning set forth in PARAGRAPH 4.1G
hereof.
"COMMON STOCK" means, collectively, the Corporation's Common Stock and
any capital stock of any class of the Corporation hereafter authorized which is
not limited to a fixed sum or percentage of par or stated value in respect to
the rights of the holders thereof to participate in
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dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"CONVERSION STOCK" means shares of the Corporation's Common Stock, par
value $0.001 per share; PROVIDED THAT if there is a change such that the
securities issuable upon conversion of the Series B Preferred are issued by an
entity other than the Corporation or there is a change in the type or class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the security issuable upon conversion of the Series B Preferred if such security
is issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"CONVERTIBLE SECURITIES" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"FUNDAMENTAL CHANGE" has the meaning set forth in paragraph 4L hereof.
"JUNIOR SECURITIES" means any capital stock or other equity securities
of the Corporation, except for the Series A Preferred and Series B Preferred.
"LIQUIDATION VALUE" of any Share of Series B Preferred as of any
particular date shall be equal to $4.00 (as equitably adjusted for subsequent
stock splits, stock combinations, stock dividends and recapitalizations).
"LIQUIDATION VALUE" of any share of Series A Preferred as of any
particular date shall be equal to $2.00 (as equitably adjusted for subsequent
stock splits, stock combinations, stock dividends and recapitalizations).
"MARCH 1999 PURCHASE AGREEMENT" means the Stock Purchase Agreement,
dated as of March 30, 1999, by and between the Corporation and Interprise
Technology Partners , L.P.
"MARKET PRICE" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of twenty-one (21) days consisting of
the day as of which "Market Price" is being determined and the twenty (20)
consecutive business days prior to such day. If at any time such security is not
listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Market Price" shall be the fair value thereof
determined jointly by the Corporation and the holders of a majority of the
Series A and B Preferred. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly
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selected by the Corporation and the holders of a majority of the Series A and B
Preferred. The determination of such appraiser shall be final and binding upon
the parties, and the Corporation shall pay the fees and expenses of such
appraiser.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities; PROVIDED, HOWEVER, that the
term "Options" shall expressly exclude options or securities issued as expressly
contemplated by PARAGRAPH 6.1B(III).
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"PUBLIC OFFERING" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force.
"PURCHASE AGREEMENT" means the Stock Purchase Agreement, dated as of
November 11, 1999, by and among the Corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"REGISTRATION AGREEMENT" means the Registration Agreement as defined in
the Purchase Agreement.
"REDEMPTION DATE" as to any share of Series A Preferred or Series B
Preferred means the date specified in the notice of any redemption at the
holder's option or the applicable date specified herein in the case of any other
redemption; PROVIDED THAT no such date shall be a Redemption Date unless the
Liquidation Value of such share (plus all accrued and unpaid dividends thereon
and any required premium with respect thereto) is actually paid in full on such
date, and if not so paid in full, the Redemption Date shall be the date on which
such amount is fully paid.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.
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SECTION 13. AMENDMENT AND WAIVER.
No amendment, modification or waiver shall be binding or effective with
respect to any provision of SECTIONS 1 to 14 hereof without the prior written
consent of the holders of a majority of the Series B Preferred outstanding at
the time such action is taken; PROVIDED THAT no such action shall change (a) the
rate at which or the manner in which dividends on the Series B Preferred accrue
or the times at which such dividends become payable or the amount payable on
redemption of the Series B Preferred or the times at which redemption of Series
B Preferred is to occur, without the prior written consent of the holders of at
least two-thirds of the Series B Preferred then outstanding, (b) the Conversion
Price of the Series B Preferred or the number of shares or class of stock into
which the Series B Preferred is convertible, without the prior written consent
of the holder of at least two-thirds of the Series B Preferred then outstanding
or (c) the percentage required to approve any change described in CLAUSES (A)
and (B) above, without the prior written consent of the holders of at least
two-thirds of the Series B Preferred then outstanding; and provided further that
no change in the terms hereof may be accomplished by merger or consolidation of
the Corporation with another corporation or entity unless the Corporation has
obtained the prior written consent of the holders of the applicable percentage
of the Series B Preferred then outstanding.
SECTION 14. NOTICES.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices and
(ii) to any stockholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).
IN WITNESS WHEREOF, World Commerce Online, Inc. has caused this
Certificate of Designations to be signed by its duly authorized officer this
11th day of November, 1999.
By: /s/ Robert Shaw
----------------------------------------
Robert Shaw, Chief Executive Officer and
President
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EXHIBIT 3.7
===============================================================================
REGISTRATION RIGHTS AGREEMENT
===============================================================================
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made
as of November 11, 1999, by and among WORLD COMMERCE ONLINE, INC., a Delaware
corporation (the "COMPANY"), Interprise Technology Partners, L.P., a Delaware
limited partnership (the "INVESTOR"), and each other investors listed on the
SCHEDULE OF HOLDERS attached hereto as EXHIBIT A (together with the Investor,
the "STOCKHOLDERS").
RECITALS:
A. The Company and the Stockholders are parties to a Stock
Purchase Agreement dated as of November 11, 1999 (the "PURCHASE AGREEMENT"). In
order to induce such Stockholders to enter into the Purchase Agreement, the
Company agreed to provide the registration rights set forth in this Agreement.
Any other Persons who purchase capital stock of the Company may, with the
consent of the Company's Board of Directors and the Investor, become parties to
this Agreement by executing a Joinder Agreement.
B. The Company and the Investor are parties to a Registration
Rights Agreement, dated as of March 30, 1999, entered into by the Investor and
World Commerce Online, Inc., a Nevada corporation ("WCO-NEVADA"), which was
previously merged into the Company (the "EXISTING REGISTRATION RIGHTS
AGREEMENT").
C. The Company and the Investor intend that this Agreement
replace and supersede the Existing Registration Rights Agreement, so that all
registration rights of the Company will be contained in a single agreement.
D. Unless otherwise provided in this Agreement, capitalized
terms used herein shall have the meanings set forth in SECTION 8 hereof.
AGREEMENT
The parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. At any time beginning
after the earlier of: (i) 180 days after the closing of the Initial Public
Offering; or (ii) March 30, 2001; and ending three (3) years after the closing
of the Initial Public Offering (the "Registration Period"), the holders of a
majority of the Registrable Securities shall be entitled to request registration
under the Securities Act of all or any portion of their Registrable Securities
on Form S-1 or any similar long-form registration ("Long-Form Registrations"),
at such time or times, and subject to the limitations, set forth in this
Agreement.
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(b) LONG-FORM REGISTRATIONS. During the Registration
Period, the holders of a majority of the Registrable Securities shall be
entitled to request three (3) Long-Form Registrations in which the Company shall
pay all Registration Expenses as set forth in SECTIONS 5(A) AND (B) hereof. A
registration shall not count as one of the Long-Form Registrations until it has
become effective and no Long-Form Registration shall count as one of the
Long-Form Registrations unless the holders of Registrable Securities are able to
register and sell at least ninety percent (90%) of the Registrable Securities
requested to be included in such registration; PROVIDED THAT in any event the
Company shall pay all Registration Expenses in connection with any registration
initiated as a Long-Form Registration whether or not it has become effective and
whether or not such registration has counted as one of the Long-Form
Registrations.
(c) SHORT-FORM REGISTRATIONS. In addition to the
Long-Form Registrations provided pursuant to SECTION L(B), during the
Registration Period the holders of a majority of the Registrable Securities
shall be entitled to request two (2) registrations under the Securities Act of
all or part of their Registrable Securities on Forms S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations") in which the Company shall
pay all Registration Expenses as set forth in SECTIONS 5(A) AND (B) hereof.
After the Company has become subject to the reporting requirements of the
Securities Exchange Act, the Company shall use its best efforts to make
Short-Form Registrations on Form S-3 available for the sale of Registrable
Securities, including, without limitation, as a "shelf registration" if so
requested by the holders of a majority of the Registrable Securities.
(d) DEMAND REGISTRATIONS. All registrations requested
pursuant to SECTIONS L(A), (B) and (C) are referred to herein as "DEMAND
REGISTRATIONS." Demand Registrations shall be Short-Form Registrations whenever
the Company is permitted to use any applicable short form. Each request for a
Demand Registration shall specify the approximate number of Registrable
Securities requested to be registered. Within ten (10) days after receipt of any
such request, the Company shall give written notice of such requested
registration to all other holders of Registrable Securities and, except as
provided in SECTION 1(E) below, shall include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within fifteen (15) days after the receipt of the
Company's notice.
(e) PRIORITY ON DEMAND REGISTRATIONS. The Company
shall not include in any Demand Registration any securities which are not
Registrable Securities without the prior written consent of the holders of a
majority of the Registrable Securities included in such registration. If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to the holders of
Registrable Securities making such Demand Registration, the Company shall
include in such registration: (i) first, the Investor Registrable Securities,
pro rata among the holders of such Investor Registrable Securities on the basis
of the number of shares owned by such holders; (ii) second, the Registrable
Securities other than Investor Registrable Securities, pro rata among the
holders of such Registrable Securities on the basis of the number of shares
owned by such holders; and (iii) third, other securities which are not
Registrable Securities requested to be included in such registration pursuant to
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<PAGE> 3
contractual registration rights ("OTHER REGISTRABLE SECURITIES"), pro rata among
the holders thereof on the basis of the number of their securities requested to
be included therein. Without the consent of the Company, any Persons other than
holders of Registrable Securities who participate in Demand Registrations must
pay their share of the Registration Expenses as provided in SECTION 5 hereof.
(f) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company
shall not be obligated to effect any Demand Registration: (i) within one hundred
eighty (180) days after the effective date of a previous Demand Registration or
a previous registration in which the holders of the Registrable Securities were
given piggyback rights pursuant to SECTION 2; (ii) if the Company, within ten
(10) days of the receipt of a request of a Demand Registration, gives notice of
its bona fide intention to effect the filing of a registration statement under
the Securities Act within ninety (90) days of receipt of such request (other
than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which is
not appropriate for the registration of Registrable Securities); (iii) during
the period starting with the date sixty (60) days prior to the Company's
estimated date of filing of, and ending on the date six (6) months immediately
following, the effective date of any registration statement pertaining to
securities of the Company (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), PROVIDED THAT the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iv) if the Company shall furnish
to the holders of the Registrable securities a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed one hundred eighty (180)
days from the receipt of the request to file such registration by such holders.
The Company may postpone for up to 180 days the filing or the effectiveness of a
registration statement for a Demand Registration if the Company and the holders
of a majority of the Registrable Securities agree that such Demand Registration
would reasonably be expected to have a material adverse effect on any proposal
or plan by the Company or any of its subsidiaries to engage in any acquisition
of assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer, reorganization or similar transaction; PROVIDED
THAT in such event, the holders of Registrable Securities initially requesting
such Demand Registration shall be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration shall not count as one of the
Demand Registrations hereunder and the Company shall pay all Registration
Expenses in connection with such registration. The Company may postpone a Demand
Registration hereunder only once in any twelve (12) month period.
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(g) SELECTION OF UNDERWRITERS. The holders of a
majority of the Registrable Securities included in any Demand Registration shall
have the right to select the investment banker(s) and manager(s) to administer
the offering.
(h) OTHER REGISTRATION RIGHTS. On or prior to the
date of this Agreement, the Company has not granted any registration rights to
any party, except for those expressly granted pursuant to this Agreement or the
Existing Registration Rights Agreement. Except as provided in this Agreement,
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the Investor (so long as the Investor holds Registrable Securities)
or the holders of a majority of the Registrable Securities (in the event the
Investor no longer holds Registrable Securities), unless such new registration
rights, including standoff obligations, are subordinate to the registration
rights granted to the Investor.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes
to register any of its securities under the Securities Act (other than pursuant
to a Demand Registration or a registration on Form S-4, Form S-8 or any
successor form) and the registration form to be used may be used for the
registration of Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company
shall give prompt written notice (in any event within five (5) business days
after its receipt of notice of any exercise of demand registration rights other
than under this Agreement) to all holders of Registrable Securities of its
intention to effect such a registration and shall include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within twenty-five (25) days after the
receipt of the Company's notice.
(b) PIGGYBACK EXPENSES. The Registration Expenses of
the holders of Registrable Securities shall be paid by the Company in all
Piggyback Registrations as set forth in SECTIONS 5(A) AND (B) hereof.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in such offering
within a price range acceptable to the Company, the Company shall include in
such registration (i) first, the securities the Company proposes to sell; (ii)
second, the Investor Registrable Securities, pro rata among the holders of such
Investor Registrable Securities on the basis of the number of shares owned by
such holders; (iii) third, the Registrable Securities other than Investor
Registrable Securities, pro rata among the holders of such Registrable
Securities on the basis of the number of shares owned by such holders; and (iv)
fourth, Other Registrable Securities requested to be included in such
registration, pro rata among the holders thereof on the basis of the number of
Other Registrable Securities requested to be included therein.
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<PAGE> 5
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a
Piggyback Registration is an underwritten secondary registration on behalf of
stockholders other than holders of Investor Registrable Securities, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the holders of a majority of the Registrable Securities to
be included in such registration, the Company shall include in such registration
(i) first, the securities requested to be included therein by the holders
requesting such registration, (ii) second, the Investor Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Investor Registrable Securities on the basis of the number of shares owned
by such holders; (iii) third, the Registrable Securities other than Investor
Registrable Securities, pro rata among the holders of such Registrable
Securities on the basis of the number of shares owned by such holders; and (iv)
fourth, any non-requesting Other Registrable Securities requested to be included
in such registration, pro rata among the holders thereof on the basis of the
number of their securities requested to be included therein.
3. HOLDBACK AGREEMENTS.
(a) HOLDERS OF REGISTRABLE SECURITIES. Each holder of
Registrable Securities shall not effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to and the 180-day period beginning
on the effective date of any underwritten registration whether or not
Registrable Securities are included (except as part of such underwritten
registration), provided that senior management and all directors of the Company
agree to a similar lock-up, and unless the underwriters managing the
registration otherwise agree.
(b) THE COMPANY. The Company shall not effect any
public sale or distribution of any of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and during the 180-day period beginning on the effective
date of any underwritten Demand Registration or any underwritten Piggyback
Registration (except as part of such Demand Registration or Piggyback
Registration or pursuant to registrations on Form S-4, Form S-8 or any successor
form), unless the underwriters managing the registered public offering otherwise
agree.
4. REGISTRATION PROCEDURES. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company shall use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective; PROVIDED THAT before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company shall furnish to the counsel
selected by the holders of a majority of the Registrable Securities included in
such registration statement copies of all such documents proposed to be filed,
which documents shall be subject to the review and comment of such counsel;
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<PAGE> 6
(b) notify each holder of Registrable Securities of
the effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than 120 days, if applicable, and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement; PROVIDED, HOWEVER, that if the Company is eligible to use Form S-3,
the holders of Registrable Securities may require the Company to keep such
registration effective as a "shelf registration" for a period of up to one year;
(c) furnish to each seller of Registrable Securities
such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction;
(e) notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and, at the request of any such seller, the Company
shall prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed and, if not so listed, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, use its best efforts to secure designation of all such Registrable
Securities covered by such registration statement as a NASDAQ "national market
system security" within the meaning of Rule llAa2-1 of the Securities and
Exchange Commission or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two (2) market makers to register as such with respect to
such Registrable Securities with the NASD;
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<PAGE> 7
(g) provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including effecting a stock split or
a combination of shares);
(i) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months beginning
with the first day of the Company's first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) permit any holder of Registrable Securities,
which holder, in the Company's sole and exclusive judgment, might be deemed to
be an underwriter or a controlling Person of the Company, to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material furnished to the Company in writing, which in the
reasonable judgment of such holder, its counsel and the Company's counsel,
should be included;
(l) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in such registration statement for
sale in any jurisdiction, the Company shall use its best efforts promptly to
obtain the withdrawal of such order;
(m) subject to SECTION 4(D) above, use its best
efforts to cause any Registrable Securities covered by such registration
statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the sellers thereof to consummate
the disposition of such Registrable Securities;
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<PAGE> 8
(n) obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by cold comfort letters as the holders of a
majority of the Registrable Securities being sold reasonably request; and
(o) if the offering is underwritten and at the
request of any seller of Registrable Securities, use its best efforts to furnish
on the date that Registrable Securities are delivered to the underwriters for
sale pursuant to such registration an opinion dated such date of counsel
representing the Company for the purposes of such registration, addressed to the
underwriters and to such seller, stating that such registration statement has
become effective under the Securities Act and that (i) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been issued
and no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (ii) the registration statement, the
related prospectus and each amendment or supplement thereof comply as to form in
all material respects with the requirements of the Securities Act (except that
such counsel need not express any opinion as to financial statements contained
therein) and (iii) to such other matters as reasonably may be requested by
counsel for the underwriters or by such seller or its counsel.
5. REGISTRATION EXPENSES.
(a) PAYMENT OF REGISTRATION EXPENSES. All expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses, fees and disbursements of custodians, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"REGISTRATION Expenses"), shall be borne as provided in this Agreement, except
that the Company shall, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed or on, the NASD
automated quotation system.
(b) REIMBURSEMENT OF REGISTRATION EXPENSES. In
connection with each Demand Registration and each Piggyback Registration, the
Company shall reimburse the holders of Registrable Securities included in such
registration for the reasonable fees and disbursements of one counsel chosen by
the holders of a majority of the Registrable Securities included in such
registration and for the reasonable fees and disbursements of each additional
counsel retained by any holder of Registrable Securities for the purpose of
rendering a legal opinion on behalf of such holder in connection with any
underwritten Demand Registration or Piggyback Registration.
(c) PAYMENT OF REGISTRATION EXPENSES BY HOLDERS OF
OTHER REGISTRABLE SECURITIES. To the extent Registration Expenses are not
required to be paid by the Company, each holder of Other Registrable Securities
included in any registration hereunder shall pay its proportionate share of all
Registration Expenses based upon the ratio of the aggregate selling price of
each holder's securities included therein to the aggregate selling price of all
securities to be so registered.
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<PAGE> 9
6. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company
agrees to indemnify, to the extent permitted by law, each holder of Registrable
Securities, its officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by (i) any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement, prospectus or preliminary prospectus or any
amendments or supplements thereto after the Company has furnished such holder
with a sufficient number of copies of the same, or (ii) any other violation or
alleged violation by the Company of any applicable securities laws or other
laws. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) INDEMNIFICATION BY THE HOLDERS OF REGISTRABLE
SECURITIES. In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto and, to
the extent permitted by law, shall indemnify the Company, its directors and
officers, each Person who controls the Company (within the meaning of the
Securities Act), and the other holders of Registrable Securities that register
Registrable Securities pursuant to such registration statement against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify shall be individual, not joint
and several, for each holder and shall be limited to the net amount of proceeds
received by such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) PROCEDURE FOR INDEMNIFICATION. Any Person
entitled to indemnification hereunder shall (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
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<PAGE> 10
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one (1) counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) CONTRIBUTION. Subject to applicable law, if the
indemnification provided for in this Section 6 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any
losses, claims, damages or liabilities referred to herein for reasons of public
policy, the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other, in connection with the matters that resulted in such loss,
claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and the indemnified
party shall be determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) SURVIVAL. The indemnification and contribution
provided for under this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party or
any officer, director or controlling Person of such indemnified party and shall
survive the transfer of securities and the termination of this Agreement.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder unless such Person:
(a) in the case of a registration which is
underwritten, agrees to sell such Person's securities on the basis provided in
the applicable underwriting arrangement; PROVIDED, HOWEVER, that no holder of
less than ten percent (10%) of all Registrable Securities included in any
underwritten registration (other than an executive officer or director of the
Company) shall be required to make any representations or warranties to the
Company or the underwriters (other than representations and warranties regarding
such holder, such holder's ownership of stock and such holder's intended method
of distribution) or to undertake any indemnification obligations to the Company
or the underwriters with respect thereto, except as otherwise provided in
SECTION 6 hereof;
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<PAGE> 11
(b) as expeditiously as possible, notifies the
Company, at any time when a prospectus relating to such Person's Registrable
Securities is required to be delivered under the Securities Act, of the
happening of any event as a result of which such prospectus contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading;
(c) complies with all reasonable requests made by the
Company or its counsel with respect to the registration of such Person's
Registrable Securities, including, without limitation, providing access to all
relevant books and records; and
(d) completes, executes and delivers all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other usual and customary documents necessary or appropriate with respect to the
offering of such Person's Registrable Securities, and in the case of a
registration which is underwritten, necessary or appropriate under the terms of
such underwriting arrangements (subject to the provision in SECTION 7(A) above).
8. DEFINITIONS.
(a) The term "INITIAL PUBLIC OFFERING" means the
first registered public offering of the Company's Common Stock by the Company
under the Securities Act with net proceeds to the Company and/or the
Stockholders of not less than $15 million.
(b) The term "INVESTOR REGISTRABLE SECURITIES" means
all Registrable Securities (i) acquired by the Investor under the Purchase
Agreement or under the Stock Purchase Agreement between WCO-Nevada and the
Investor, dated as of March 30, 1999 (the "MARCH 30 SPA") and held by the
Investor at the time of exercise of the relevant right under this Agreement;
(ii) all Registrable Securities acquired by the Purchasers (as defined in the
Purchase Agreement) under the Purchase Agreement and held by the Purchasers at
the time of exercise of the relevant right under this Agreement; and (iii) all
other Registrable Securities subsequently acquired by holders of Investor
Registrable Securities (including Miller Technology Management, L.P., its
affiliates and partners pursuant to any liquidation or dissolution of the
Investor). Investor Registrable Securities will continue to be Investor
Registrable Securities if held or acquired by any holder of Investor Registrable
Securities.
(c) The term "PERMITTED TRANSFEREE" means:
(i) a company in which the transferor(s)
own(s) directly or indirectly more than
50% of the equity and voting capital or
has the right and power to direct the
policy and management of such company;
(ii) a company that owns directly or indirectly
more than 50% of the equity and voting
capital or has the right and power to
determine the policy and management of the
transferor(s);
(iii) in the case of a transfer by a partnership
(including a limited partnership), to any
partners, or any partnership (including a
limited partnership) managed by the same
management company or to the partners
thereof, or to any partners of such;
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<PAGE> 12
(iv) in the case of a body corporate, to its
stockholders in the same proportion as
their ownership interest in the body
corporate; and
(v) in the case of a stockholder who is an
individual to his or her spouse, children,
or grandchildren, other than to minors and
persons incapacitated as a matter of law,
or to trusts and living trusts on behalf
of any of the foregoing; provided that in
all cases, such Permitted Transferee has
agreed in writing to assume the
obligations of the transferor under all
agreements involving the Company and
provided that the transfer does not
violate the federal securities laws (the
opinion of counsel for the transferor that
a transfer does not violate the federal
securities laws will suffice to satisfy
this requirement).
(d) The term "PERSON" means any individual,
corporation, partnership, joint venture, association, joint-stock company,
limited liability company, trust or unincorporated organization.
(e) The term "REGISTRATION EXPENSES" has the meaning
set forth in SECTION 5 above.
(f) The term "REGISTRABLE SECURITIES" means (i) any
Common Stock issued or issuable pursuant to or upon conversion or
recapitalization of any Series A Preferred Stock or Series B Preferred Stock,
(ii) any other Common Stock issued or issuable with respect to the securities
referred to in clause (i) by way of a stock dividend or stock split or in
connection with an exchange or combination of shares, recapitalization, merger,
consolidation or other reorganization, and (iii) any other shares of Common
Stock held by Persons holding securities described in clauses (i) and (ii),
inclusive above, including, without limitation, any shares of Common Stock
issued upon conversion of the Company's preferred stock. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force). For purposes of this Agreement, a Person shall be
deemed to be a holder of Registrable Securities whenever such Person has the
right to acquire such Registrable Securities (upon conversion of any capital
stock or upon exercise of any options or warrants or in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
(g) The term "SECURITIES ACT" means the Securities
Act of 1933, as amended, or any similar federal law then in force.
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<PAGE> 13
(h) The term "SECURITIES EXCHANGE ACT" means the
Securities Exchange Act of 1934, as amended, or any similar federal law then in
force.
9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company shall not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to the holders of Registrable
Securities in this Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The
Company shall not take any action, or permit any change to occur, with respect
to its securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration.
(c) REMEDIES. Any Person having rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically to recover damages caused by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party may in its
sole discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
(d) AMENDMENTS AND WAIVERS. Except as otherwise
provided herein, the provisions of this Agreement may be amended or waived only
upon the prior written consent of the Company and the holders of a majority of
all Registrable Securities; PROVIDED, HOWEVER, that no amendment or waiver which
materially and adversely effects the rights of the holders of the Investor
Registrable Securities hereunder may be made without the consent of a majority
of the holders of the Investor Registrable Securities.
(e) SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are for
the benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities,
including without limitation any Permitted Transferee.
(f) SEVERABILITY. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
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<PAGE> 14
(g) As of the Closing as defined in the Purchase
Agreement, the Existing Registration Rights Agreement shall terminate and be of
no further force and effect.
(h) COUNTERPARTS; FACSIMILE TRANSMISSION. This
Agreement may be executed simultaneously in two or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same Agreement. Each
party to this Agreement agrees that it will be bound by its own telecopied
signature and that it accepts the telecopied signature of each other party to
this Agreement.
(i) DESCRIPTIVE HEADINGS. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(j) GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the domestic laws of the State of Delaware,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware.
(k) NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally to the recipient, sent to the recipient by reputable
overnight courier service (charges prepaid) or forty-eight (48) hours after
deposited in the United States mail, certified or registered to the recipient by
postage prepaid or by facsimile. Such notices, demands and other communications
shall be sent to the Investor and to each Shareholder at the addresses indicated
on the Schedule of Holders attached hereto and to the Company at the address of
its corporate headquarters or to such other address or to the attention of such
other Person as the recipient party has specified by prior written notice to the
sending party.
(l) NEW PARTIES. During the term of this Agreement,
the Company may, with the consent of the Company's Board of Directors and the
Investor, allow other Persons to become parties to this Agreement by executing a
Joinder Agreement, and the SCHEDULE OF HOLDERS attached hereto as EXHIBIT A
shall be revised and updated accordingly. Notwithstanding the above, upon
execution of a Joinder Agreement, all Purchasers under the Purchase Agreement
automatically shall become parties to this Agreement and be added to the
SCHEDULE OF HOLDERS attached hereto as EXHIBIT A.
(m) TERMINATION OF AGREEMENT. All registration rights
granted hereunder will expire and this Agreement will be terminated at such time
as (i) ninety percent (90%) of the total number of Registrable Securities issued
by the Company pursuant to the March 30 SPA and the Purchase Agreement (as
adjusted for stock splits, consolidations, recapitalization, or the issuance of
stock dividends) have been sold to the public (either in an offering registered
under the Securities Act or pursuant to Rule 144 promulgated under the
Securities Act), and (ii) the average daily trading volume of the Common Stock
over the six (6) month period immediately preceding the termination is at least
one-quarter of one percent (1/4%) of the Company's outstanding Common Stock.
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<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
-------------------------------------------
Robert Shaw, Chief Executive
Officer and President
INTERPRISE TECHNOLOGY PARTNERS, L.P.
By:/s/ DAVID R. PARKER
-------------------------------------------
David R. Parker
Managing Principal
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<PAGE> 16
EXHIBIT A TO
REGISTRATION AGREEMENT
SCHEDULE OF HOLDERS
INVESTORS:
Interprise Technology Partners, L.P.
c/o Miller Capital Management, Inc.
30th Floor
1001 Brickell Bay Drive
Miami, FL 33131
Attention: David R. Parker
Facsimile: (305) 374-3317
[Insert the names of Purchasers under November 1999 SPA]
A-1
<PAGE> 1
Exhibit 4.1
NUMBER SHARES
WORLD COMMERCE ONLINE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
[WCO LOGO] COMMON STOCK CUSIP 98144Q 10 3
THIS IS TO CERTIFY THAT
is the owner of
CAPITALIZATION 100,000,000 SHARES CAPITAL STOCK AT $.001 PAR VALUE
WORLD COMMERCE ONLINE, INC.
Transferable on the books of the Corporation in person, or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ /s/
-------------------- [WORLD COMMERCE ----------------------
Secretary ONLINE, INC. President
CORPORATE
SEAL
DELAWARE]
<PAGE> 2
NOTICE: Signature must be guaranteed by a firm which is a member of a registered
national stock exchange, or by a bank (other than a savings bank), or a
trust company. The following abbreviations, when used in the inscription
on the face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -_________ Custodian ___________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act __________________
tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, _____________________ hereby sell, assign, and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
______________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the capital stock represented by the within certificate, and do hereby
irrevocable constitute and appoint
_________________________________________________________________________
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated __________________
_____________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE> 1
EXHIBIT 4.2
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, POOLE CARBONE CAPITAL
PARTNERS, INC., (together with its successors and permitted assigns, "Holder"),
is entitled to purchase from World Commerce Online, Inc., a Nevada corporation
(the "Company"), at any time and from time to time prior to 5 P.M. local time at
the place where the Warrant Office hereinafter referred to is located on or
before January 14, 2009, 50,000 duly authorized, validly issued, fully paid and
nonassessable shares of common stock, par value $.001 per share, of the Company
("Common Stock"), at the Current Warrant Price (as hereinafter defined) in
lawful money of the United States of America. The purchase price hereunder at
any time of a single share of Common Stock is referred to herein as the "Current
Warrant Price." Initially, and until adjustment in the manner hereinafter
provided, the Current Warrant Price with respect to such 50,000 shares shall be
$10.00 per share. The number of shares of Common Stock purchasable hereunder and
the Current Warrant Price are subject to adjustment from time to time in the
manner provided in Article 4 below. Certain terms in this Warrant are defined in
Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, Holder shall deliver to the
Company at the Warrant Office designated pursuant to Section 2.1: (i) a written
notice, in substantially the form of the Subscription Notice appearing at the
end of this Warrant, of such Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
the nature of payment, whether by check or by this Warrant (pursuant to Section
1.4) or by a combination thereof; (ii) a certified or official bank check
payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
<PAGE> 2
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
2
<PAGE> 3
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc. that such registration is not required."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof as shall be reasonably acceptable to the Company,
the securities represented thereby need no longer be subject to the restrictions
contained in Article 3 below. The provisions of Article 3 below shall be binding
upon all subsequent holders of this Warrant.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article 2.
SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books
at the Warrant Office for the registration and transfer of this Warrant, and,
subject to the provisions of Article 3 below, this Warrant and all rights
hereunder are transferable, in whole or in part, on said books at said office,
upon surrender of this Warrant at said office, together with a written
assignment of this Warrant duly executed by the holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. A Warrant may be
exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued. No holder of this Warrant may divide this or any
other Warrant into a Warrant exercisable into less than 10,000 shares of Common
Stock.
3
<PAGE> 4
SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant or any
new Warrant hereunder.
ARTICLE 3
RESTRICTIONS ON EXERCISE
AND TRANSFER; REGISTRATION RIGHTS
SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The holder of this
Warrant, as of the date of issuance hereof, represents to the Company that it is
not acquiring the Warrant with a view to the distribution thereof.
Notwithstanding any provisions contained in this Warrant to the contrary, this
Warrant and the related Warrant Shares shall not be transferable except pursuant
to the proviso contained in the following sentence or upon the conditions
specified in this Article 3, which conditions are intended, among other things,
to insure compliance with the provisions of the Act and applicable state law in
respect of the transfer of this Warrant or such Warrant Shares. The holder of
this Warrant, by its acceptance hereof, agrees that it will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of such holder's counsel reasonably satisfactory to the Company (as such
opinion and such counsel are described in Section 3.2 below) or until
registration of such Warrant Shares under the Act has become effective or after
a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule
144 or Rule 144A under the Act.
SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The
holder of this Warrant, by its acceptance hereof, agrees that prior to any
transfer of this Warrant or of the related Warrant Shares (other than pursuant
to a registration under the Act), such holder will give written notice to the
Company of its intention to effect such transfer, together with an opinion of
counsel for such holder as shall be reasonably acceptable to the Company, to the
effect that the proposed transfer of this Warrant and/or such Warrant Shares may
be effected without registration under the Act or applicable state law. Upon
delivery of such notice and opinion to the Company, the holder of this Warrant
or such Warrant Shares shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice delivered by such holder to the Company; PROVIDED, HOWEVER, that
if such method of disposition would, in the opinion of such counsel, require
that the Company take any reasonable action and/or execute and file with the
Commission and/or any state securities authority with jurisdiction and/or
deliver to the Warrantholder or any other person any form or document (other
than a registration statement under the Act or under any state securities laws
or any information requirements pursuant to Regulation D) in order to establish
the entitlement of the holder of this Warrant to take advantage of such method
of disposition, the Company agrees, at its expense, to take any such reasonable
action and/or execute and file and/or deliver any such form or document.
4
<PAGE> 5
SECTION 3.3. "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to the expiration of the
Warrants, proposes to register any of its equity securities (as defined in the
Act), other than securities which are convertible into shares of Common Stock,
under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)
or on any other form upon which may be registered securities similar to the
Warrant Shares, it will at each such time give written notice at least 30 days
prior to the filing of the registration statement to all Warrantholders of its
intention so to do. Such notice shall specify the proposed date of the filing of
the registration statement and advise each Warrantholder of its right to
participate therein. Upon the written request of any Warrantholder given prior
to the proposed date of filing set forth in such notice, the Company will cause
each Warrant Share which the Company has been requested to register by such
Warrantholder to be registered under the Act, all to the extent requisite to
permit the sale or other disposition by such Warrantholder of the Warrant Shares
so registered.
(b) If, in the written opinion of the underwriter or
underwriters managing the public offering which is the subject of a registration
pursuant to Section 3.3(a) above (or in the event that such distribution shall
not be underwritten, in the written opinion of an investment banking firm of
recognized standing satisfactory to the Warrantholders), the total amount of the
securities to be so registered, when added to the total amount of Warrant Shares
which the Warrantholders have requested to be registered pursuant to Section
3.3(a) above, will exceed the maximum amount of securities of the Company which
can be marketed: (i) at a price reasonably related to their then current market
value; or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall have the right to exclude from such
registration such number of Warrant Shares which it would otherwise be required
to register pursuant to Section 3.3(a) above as is necessary to reduce the total
amount of securities to be so registered to the maximum amount of securities
which can be so marketed; PROVIDED, HOWEVER, that if the securities (other than
the Warrant Shares) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only cut back Warrant Shares
pro rata with the securities held by such other persons (it being agreed that in
the case where such registration is to be effected as a result of the exercise
by a holder of the Company's securities of such holder's right to cause such
securities to be so registered, such pro rata cut back shall include the
Company).
SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the
Company is obligated by the provisions of this Article 3 to effect the
registration of any Warrant Shares under the Act, as expeditiously as possible
the Company will:
(a) as expeditiously prepare and file with the Commission a
registration statement with respect to such Warrant Shares and use its best
efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the securities covered by the
registration statement; PROVIDED, HOWEVER, that in the event that the Warrant
Shares covered by such registration statement are not to be sold to or through
5
<PAGE> 6
underwriters acting for the Company, the Company shall not be required to keep
such registration statement in effect, or to prepare and file any amendments or
supplements thereto, after the expiration of six months following the date on
which such registration statement becomes effective under the Act or such longer
period during which the Commission requires that such registration statement be
kept effective with respect to any of the Warrant Shares so registered;
(b) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Act
with respect to the disposition of all Warrant Shares covered by such
registration statement, whenever the Warrantholders for whom such Warrant Shares
are registered or are to be registered shall desire to dispose of the same,
subject, however to the proviso contained in Section 3.4(a) above; PROVIDED,
HOWEVER, that in any event the Company's obligations under this Section 3.4(b)
shall terminate 90 days after the effective date of any such registration
statement if none of the Warrant Shares registered thereunder shall have been
sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares;
SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses
of all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Article 3 shall be paid for by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.6. INFORMATION FROM WARRANTHOLDERS. Notices and requests
delivered by Warrantholders to the Company pursuant to this Article 3 shall
contain such information regarding the Warrant Shares and the intended method of
disposition thereof as shall reasonably be required in connection with the
action to be taken.
6
<PAGE> 7
SECTION 3.7. COMPANY'S INDEMNIFICATION. In the event of any
registration under the Act of any Warrant Shares pursuant to this Article 3, the
Company hereby agrees to indemnify and hold harmless each Warrantholder
disposing of such Warrant Shares and each other person, if any, who controls
such Warrantholder within the meaning of Section 15 of the Act and each other
person (including underwriters) who participates in the offering of such Warrant
Shares against any losses, claims, damages or liabilities, joint or several, to
which such Warrantholder or controlling person or participating person may
become subject under the Act or otherwise, in so far as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Warrant Shares were registered under the Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
Warrantholder and each such controlling person or participating person for any
legal or any other expenses incurred by such Warrantholder or such controlling
person or participating person in connection with investigating or defending any
such loss, claim, damage, liability or proceeding; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon: (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Warrantholder or such controlling
or participating person, as the case may be, specifically for use in the
preparation thereof; or (b) an untrue statement or alleged untrue statement,
omission or alleged omission in a prospectus if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the prospectus which amendment or supplement is delivered to such
Warrantholder and such Warrantholder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of Warrant
Shares to the person asserting such loss, claim, damage, liability or expense.
SECTION 3.8. WARRANTHOLDER'S INDEMNIFICATIONS. If the Company so
requests, each Warrantholder for whom Warrant Shares are to be so registered
shall execute an agreement or agreements, whereby such Warrantholder agrees to
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of Section 15 of the Act in respect
of such registration statement and each other person, if any, which controls the
Company within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such other person or such
person controlling the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceeding in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Warrant Shares were registered under the
7
<PAGE> 8
Act, in any preliminary prospectus or final prospectus contained therein or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
which, in each such case, has been made in or omitted from such registration
statement, said preliminary or final prospectus or said amendment or supplement
in reliance upon, and in conformity with, information furnished to the Company
by such Warrantholder specifically for use in the preparation thereof. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
SECTION 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification; and (b) unless, in such indemnified party's reasonable
judgment, a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, HOWEVER, that the failure of an indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 3.9 with respect to such indemnified party,
except to the extent that the indemnifying party is actually prejudiced by such
failure. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
Sections 3.7 and 3.8 above is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.10. PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either: (i) there will be available adequate current public information with
respect to the Company as required by said Rules; or (ii) if such information is
not available the Company will use its best efforts to make such information
available without delay.
8
<PAGE> 9
ARTICLE 4
ANTI-DILUTION PROVISIONS
SECTION 4.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 4.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.3. EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
thereafter be entitled to purchase pursuant to this Warrant (in lieu of the
number of shares of Common Stock which such holder would have been entitled to
purchase immediately prior to such consolidation, merger, sale or conveyance)
the shares of stock or other securities or property to which such number of
shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
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<PAGE> 10
to that which would have been payable if such number of shares of Common Stock
had been purchased by exercise of this Warrant immediately prior thereto. In
case of any such consolidation, merger, sale or conveyance, an appropriate
provision shall be made with respect to the rights and interests thereafter of
any holder of this Warrant, to the end that all the provisions of this Warrant
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect any
such consolidation, merger, sale or conveyance unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or purchasing such assets
shall assume by written instrument, executed and mailed or delivered to the
holder of this Warrant, the obligation to deliver to such holder such shares of
stock or other securities or property as, in accordance with the foregoing
provisions, such Warrantholder may be entitled to receive, which instrument
shall contain the express assumption by such successor corporation of the due
and punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
SECTION 4.4. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 4.2 above) while this Warrant remains
outstanding, then, as a condition of such reorganization or reclassification,
lawful and adequate provision shall be made whereby the holder of this Warrant
shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of
the number of shares of Common Stock which such holder would have been entitled
to purchase immediately prior to such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to which
such number of shares of Common Stock would have been entitled at the time of
such reorganization or reclassification, at an aggregate purchase price equal to
that which would have been payable if such number of shares of Common Stock had
been purchased immediately prior to such reorganization or reclassification. In
case of any such capital reorganization or reclassification, appropriate
provision shall be made with respect to the rights and interests thereafter of
the holders of Warrants, to the end that all the provisions of the Warrants
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of the Warrants.
SECTION 4.5. STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the holder of this
Warrant by reason of other events herein set forth, then and in each such case
the Company will promptly prepare a schedule setting forth the adjusted Current
Warrant Price and the adjusted number of shares purchasable hereunder, or
specifying the other shares of stock, other securities or property and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
schedule to the registered holder of this Warrant.
SECTION 4.6. NOTIFICATIONS BY THE COMPANY. In case at any time the
Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes);
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<PAGE> 11
(b) to effect any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(c) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more such cases,
the Company shall give written notice to the registered holder of this Warrant
of the date on which: (i) the transfer books of the Company shall close or a
record date shall be taken for such dividend; (ii) a record date shall be taken
to determine stockholders entitled to notice of and to vote at any meeting of
stockholders at which any such proposed reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding-up is
to be considered; or (iii) such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also specify the date as of which the
holders of Common Stock of record shall participate in such dividend, or shall
be entitled to vote on or exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up, as the case may
be. Such written notice shall be given not less than 10 days prior to such date
on which the transfer books of the Company shall close or a record date shall be
taken or any event shall occur, as the case may be, and such notice may state
that any such action will be taken only if certain events specified in such
notice (such as the clearing of proxy material by the Commission or an
affirmative vote of stockholders) occur prior thereto.
ARTICLE 5
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
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"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially $10.00. The Current Warrant Price is subject to adjustment from time
to time pursuant to Article 4 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 4 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of the Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right initially to purchase an aggregate of 50,000 shares of Common Stock and
all warrants issued in substitution or subdivision hereof.
ARTICLE 6
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
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<PAGE> 13
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 7
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 8
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to,
such Holder at the last address shown on the books of the Company maintained at
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<PAGE> 14
the Warrant Office for the registration and registration of transfer of the
Warrants or at any more recent address of which any Warrantholder shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to holders of record of outstanding Warrant
Shares shall be delivered at, or sent by certified or registered mail to, each
such holder at such holder's address as the same appears on the stock records of
the Company. Any notice or other document required or permitted to be given or
delivered to the Company, other than such notice or documents required to be
delivered to the Warrant Office, shall be delivered at, or sent by certified or
registered mail to, the office of the Company at 9677 Tradeport Drive, Orlando,
Florida 32827, or such other address within the United States of America as
shall have been furnished by the Company to the Warrantholders and the holders
of record of Warrant Shares. Any notice or other document sent by certified or
registered mail, return receipt requested, shall be deemed to have been
delivered and received when sent if the receipt is appropriately completed and
returned. Notices or documents delivered in any other manner than as set forth
above shall be deemed to have been delivered only when and if received.
ARTICLE 9
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 10
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
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<PAGE> 15
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
ARTICLE 11
SUCCESSORS AND ASSIGNS
The rights and obligations of the parties hereunder shall be binding
upon and inure to the benefit of their respective successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 15th day of January, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
-------------------------------------------
Robert Shaw
President and Chief Executive Officer
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<PAGE> 16
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
---------------------------
Signature Guaranteed:
Dated:
------------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
---------------------------
Signature Guaranteed:
Dated:
------------------------------------
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<PAGE> 1
EXHIBIT 4.3
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, POOLE CARBONE CAPITAL
PARTNERS, INC., (together with its successors and permitted assigns, "Holder"),
is entitled to purchase from World Commerce Online, Inc., a Nevada corporation
(the "Company"), at any time and from time to time prior to 5 P.M. local time at
the place where the Warrant Office hereinafter referred to is located on or
before January 14, 2009, 50,000 duly authorized, validly issued, fully paid and
nonassessable shares of common stock, par value $.001 per share, of the Company
("Common Stock"), at the Current Warrant Price (as hereinafter defined) in
lawful money of the United States of America. The purchase price hereunder at
any time of a single share of Common Stock is referred to herein as the "Current
Warrant Price." Initially, and until adjustment in the manner hereinafter
provided, the Current Warrant Price with respect to such 50,000 shares shall be
$12.00 per share. The number of shares of Common Stock purchasable hereunder and
the Current Warrant Price are subject to adjustment from time to time in the
manner provided in Article 4 below. Certain terms in this Warrant are defined in
Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, Holder shall deliver to the
Company at the Warrant Office designated pursuant to Section 2.1: (i) a written
notice, in substantially the form of the Subscription Notice appearing at the
end of this Warrant, of such Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
the nature of payment, whether by check or by this Warrant (pursuant to Section
1.4) or by a combination thereof; (ii) a certified or official bank check
payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company
<PAGE> 2
shall as promptly as practicable, and in any event within 10 days after receipt
by the Company of such notice, execute and deliver or cause to be executed and
delivered, in accordance with said notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
notice. The stock certificate or certificates so delivered shall be in the
denomination as may be specified in said notice and shall be issued in the name
of such holder or such other name as shall be designated in said notice. Such
certificate or certificates shall be deemed to have been issued and such holder
or any other person so designated to be named therein shall be deemed for all
purposes to have become a holder of record of such shares as of the date the
consideration specified for such shares is received by the Company as aforesaid.
If this Warrant shall have been exercised only in part, the Company shall, at
the time of delivery of said certificate or certificates, deliver to such holder
a new Warrant evidencing the rights of such holder to purchase the remaining
shares of Common Stock called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant, or, at the request of such
holder, appropriate notation may be made on this Warrant and the same returned
to such holder. The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, issuance and delivery of such stock
certificates and any new Warrant, except that, in case such stock certificates
or new Warrant shall be registered in a name or names other than the name of the
holder of this Warrant, funds sufficient to pay all stock transfer taxes which
shall be payable upon the issuance of such stock certificate or certificates or
any new Warrant shall be paid by the holder hereof at the time of delivering the
notice of exercise mentioned above or promptly upon receipt of a written request
of the Company for payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend
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<PAGE> 3
required by any securities exchange upon which such Warrant Shares may, at the
time of such exercise, be listed) on the face thereof:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc. that such registration is not required."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof as shall be reasonably acceptable to the Company,
the securities represented thereby need no longer be subject to the restrictions
contained in Article 3 below. The provisions of Article 3 below shall be binding
upon all subsequent holders of this Warrant.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article 2.
SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books
at the Warrant Office for the registration and transfer of this Warrant, and,
subject to the provisions of Article 3 below, this Warrant and all rights
hereunder are transferable, in whole or in part, on said books at said office,
upon surrender of this Warrant at said office, together with a written
assignment of this Warrant duly executed by the holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. A Warrant may be
exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued. No holder of this Warrant may divide this or any
other Warrant into a Warrant exercisable into less than 10,000 shares of Common
Stock.
3
<PAGE> 4
SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant or any
new Warrant hereunder.
ARTICLE 3
RESTRICTIONS ON EXERCISE
AND TRANSFER; REGISTRATION RIGHTS
SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The holder of this
Warrant, as of the date of issuance hereof, represents to the Company that it is
not acquiring the Warrant with a view to the distribution thereof.
Notwithstanding any provisions contained in this Warrant to the contrary, this
Warrant and the related Warrant Shares shall not be transferable except pursuant
to the proviso contained in the following sentence or upon the conditions
specified in this Article 3, which conditions are intended, among other things,
to insure compliance with the provisions of the Act and applicable state law in
respect of the transfer of this Warrant or such Warrant Shares. The holder of
this Warrant, by its acceptance hereof, agrees that it will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of such holder's counsel reasonably satisfactory to the Company (as such
opinion and such counsel are described in Section 3.2 below) or until
registration of such Warrant Shares under the Act has become effective or after
a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule
144 or Rule 144A under the Act.
SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The
holder of this Warrant, by its acceptance hereof, agrees that prior to any
transfer of this Warrant or of the related Warrant Shares (other than pursuant
to a registration under the Act), such holder will give written notice to the
Company of its intention to effect such transfer, together with an opinion of
counsel for such holder as shall be reasonably acceptable to the Company, to the
effect that the proposed transfer of this Warrant and/or such Warrant Shares may
be effected without registration under the Act or applicable state law. Upon
delivery of such notice and opinion to the Company, the holder of this Warrant
or such Warrant Shares shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice delivered by such holder to the Company; PROVIDED, HOWEVER, that
if such method of disposition would, in the opinion of such counsel, require
that the Company take any reasonable action and/or execute and file with the
Commission and/or any state securities authority with jurisdiction and/or
deliver to the Warrantholder or any other person any form or document (other
than a registration statement under the Act or under any state securities laws
or any information requirements pursuant to Regulation D) in order to establish
the entitlement of the holder of this Warrant to take advantage of such method
of disposition, the Company agrees, at its expense, to take any such reasonable
action and/or execute and file and/or deliver any such form or document.
4
<PAGE> 5
SECTION 3.3. "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to the expiration of the
Warrants, proposes to register any of its equity securities (as defined in the
Act), other than securities which are convertible into shares of Common Stock,
under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)
or on any other form upon which may be registered securities similar to the
Warrant Shares, it will at each such time give written notice at least 30 days
prior to the filing of the registration statement to all Warrantholders of its
intention so to do. Such notice shall specify the proposed date of the filing of
the registration statement and advise each Warrantholder of its right to
participate therein. Upon the written request of any Warrantholder given prior
to the proposed date of filing set forth in such notice, the Company will cause
each Warrant Share which the Company has been requested to register by such
Warrantholder to be registered under the Act, all to the extent requisite to
permit the sale or other disposition by such Warrantholder of the Warrant Shares
so registered.
(b) If, in the written opinion of the underwriter or
underwriters managing the public offering which is the subject of a registration
pursuant to Section 3.3(a) above (or in the event that such distribution shall
not be underwritten, in the written opinion of an investment banking firm of
recognized standing satisfactory to the Warrantholders), the total amount of the
securities to be so registered, when added to the total amount of Warrant Shares
which the Warrantholders have requested to be registered pursuant to Section
3.3(a) above, will exceed the maximum amount of securities of the Company which
can be marketed: (i) at a price reasonably related to their then current market
value; or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall have the right to exclude from such
registration such number of Warrant Shares which it would otherwise be required
to register pursuant to Section 3.3(a) above as is necessary to reduce the total
amount of securities to be so registered to the maximum amount of securities
which can be so marketed; PROVIDED, HOWEVER, that if the securities (other than
the Warrant Shares) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only cut back Warrant Shares
pro rata with the securities held by such other persons (it being agreed that in
the case where such registration is to be effected as a result of the exercise
by a holder of the Company's securities of such holder's right to cause such
securities to be so registered, such pro rata cut back shall include the
Company).
SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the
Company is obligated by the provisions of this Article 3 to effect the
registration of any Warrant Shares under the Act, as expeditiously as possible
the Company will:
(a) as expeditiously prepare and file with the Commission a
registration statement with respect to such Warrant Shares and use its best
efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the securities covered by the
registration statement; PROVIDED, HOWEVER, that in the event that the Warrant
Shares covered by such registration statement are not to be sold to or through
underwriters acting for the Company, the Company shall not be required to keep
such registration statement in effect, or to prepare and file any amendments or
supplements thereto,
5
<PAGE> 6
after the expiration of six months following the date on which such registration
statement becomes effective under the Act or such longer period during which the
Commission requires that such registration statement be kept effective with
respect to any of the Warrant Shares so registered;
(b) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Act
with respect to the disposition of all Warrant Shares covered by such
registration statement, whenever the Warrantholders for whom such Warrant Shares
are registered or are to be registered shall desire to dispose of the same,
subject, however to the proviso contained in Section 3.4(a) above; PROVIDED,
HOWEVER, that in any event the Company's obligations under this Section 3.4(b)
shall terminate 90 days after the effective date of any such registration
statement if none of the Warrant Shares registered thereunder shall have been
sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares;
SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses
of all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Article 3 shall be paid for by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.6. INFORMATION FROM WARRANTHOLDERS. Notices and requests
delivered by Warrantholders to the Company pursuant to this Article 3 shall
contain such information regarding the Warrant Shares and the intended method of
disposition thereof as shall reasonably be required in connection with the
action to be taken.
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SECTION 3.7. COMPANY'S INDEMNIFICATION. In the event of any
registration under the Act of any Warrant Shares pursuant to this Article 3, the
Company hereby agrees to indemnify and hold harmless each Warrantholder
disposing of such Warrant Shares and each other person, if any, who controls
such Warrantholder within the meaning of Section 15 of the Act and each other
person (including underwriters) who participates in the offering of such Warrant
Shares against any losses, claims, damages or liabilities, joint or several, to
which such Warrantholder or controlling person or participating person may
become subject under the Act or otherwise, in so far as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Warrant Shares were registered under the Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
Warrantholder and each such controlling person or participating person for any
legal or any other expenses incurred by such Warrantholder or such controlling
person or participating person in connection with investigating or defending any
such loss, claim, damage, liability or proceeding; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon: (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Warrantholder or such controlling
or participating person, as the case may be, specifically for use in the
preparation thereof; or (b) an untrue statement or alleged untrue statement,
omission or alleged omission in a prospectus if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the prospectus which amendment or supplement is delivered to such
Warrantholder and such Warrantholder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of Warrant
Shares to the person asserting such loss, claim, damage, liability or expense.
SECTION 3.8. WARRANTHOLDER'S INDEMNIFICATIONS. If the Company so
requests, each Warrantholder for whom Warrant Shares are to be so registered
shall execute an agreement or agreements, whereby such Warrantholder agrees to
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of Section 15 of the Act in respect
of such registration statement and each other person, if any, which controls the
Company within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such other person or such
person controlling the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceeding in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Warrant Shares were registered under the
Act, in any preliminary prospectus or final prospectus contained therein or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
which, in each such case, has been made in or omitted from such registration
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<PAGE> 8
statement, said preliminary or final prospectus or said amendment or supplement
in reliance upon, and in conformity with, information furnished to the Company
by such Warrantholder specifically for use in the preparation thereof. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
SECTION 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification; and (b) unless, in such indemnified party's reasonable
judgment, a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, HOWEVER, that the failure of an indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 3.9 with respect to such indemnified party,
except to the extent that the indemnifying party is actually prejudiced by such
failure. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
Sections 3.7 and 3.8 above is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.10. PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either: (i) there will be available adequate current public information with
respect to the Company as required by said Rules; or (ii) if such information is
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not available the Company will use its best efforts to make such information
available without delay.
ARTICLE 4
ANTI-DILUTION PROVISIONS
SECTION 4.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 4.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.3. EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
thereafter be entitled to purchase pursuant to this Warrant (in lieu of the
number of shares of Common Stock which such holder would have been entitled to
purchase immediately prior to such consolidation, merger, sale or conveyance)
the shares of stock or other securities or property to which such number of
shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
to that which would have been payable if such number of shares of Common Stock
had been purchased by exercise of this Warrant immediately prior thereto. In
case of any such consolidation, merger, sale or conveyance, an appropriate
provision shall be made with respect to the rights and interests
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thereafter of any holder of this Warrant, to the end that all the provisions of
this Warrant (including the provisions of this Article 4) shall thereafter be
applicable, as nearly as practicable, to such stock or other securities or
property thereafter deliverable upon the exercise of this Warrant. The Company
shall not effect any such consolidation, merger, sale or conveyance unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or
purchasing such assets shall assume by written instrument, executed and mailed
or delivered to the holder of this Warrant, the obligation to deliver to such
holder such shares of stock or other securities or property as, in accordance
with the foregoing provisions, such Warrantholder may be entitled to receive,
which instrument shall contain the express assumption by such successor
corporation of the due and punctual performance and observance of every
provision of this Warrant to be performed and observed by the Company and of all
liabilities and obligations of the Company hereunder.
SECTION 4.4. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 4.2 above) while this Warrant remains
outstanding, then, as a condition of such reorganization or reclassification,
lawful and adequate provision shall be made whereby the holder of this Warrant
shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of
the number of shares of Common Stock which such holder would have been entitled
to purchase immediately prior to such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to which
such number of shares of Common Stock would have been entitled at the time of
such reorganization or reclassification, at an aggregate purchase price equal to
that which would have been payable if such number of shares of Common Stock had
been purchased immediately prior to such reorganization or reclassification. In
case of any such capital reorganization or reclassification, appropriate
provision shall be made with respect to the rights and interests thereafter of
the holders of Warrants, to the end that all the provisions of the Warrants
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of the Warrants.
SECTION 4.5. STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the holder of this
Warrant by reason of other events herein set forth, then and in each such case
the Company will promptly prepare a schedule setting forth the adjusted Current
Warrant Price and the adjusted number of shares purchasable hereunder, or
specifying the other shares of stock, other securities or property and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
schedule to the registered holder of this Warrant.
SECTION 4.6. NOTIFICATIONS BY THE COMPANY. In case at any time the
Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes);
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(b) to effect any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(c) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more such cases,
the Company shall give written notice to the registered holder of this Warrant
of the date on which: (i) the transfer books of the Company shall close or a
record date shall be taken for such dividend; (ii) a record date shall be taken
to determine stockholders entitled to notice of and to vote at any meeting of
stockholders at which any such proposed reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding-up is
to be considered; or (iii) such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also specify the date as of which the
holders of Common Stock of record shall participate in such dividend, or shall
be entitled to vote on or exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up, as the case may
be. Such written notice shall be given not less than 10 days prior to such date
on which the transfer books of the Company shall close or a record date shall be
taken or any event shall occur, as the case may be, and such notice may state
that any such action will be taken only if certain events specified in such
notice (such as the clearing of proxy material by the Commission or an
affirmative vote of stockholders) occur prior thereto.
ARTICLE 5
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
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"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially $12.00. The Current Warrant Price is subject to adjustment from time
to time pursuant to Article 4 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 4 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of the Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right initially to purchase an aggregate of 50,000 shares of Common Stock and
all warrants issued in substitution or subdivision hereof.
ARTICLE 6
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon
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exercise of this Warrant, it will take any corporate action which may be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Common Stock at such adjusted Current Warrant
Price;
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 7
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 8
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to,
such Holder at the last address shown on
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the books of the Company maintained at the Warrant Office for the registration
and registration of transfer of the Warrants or at any more recent address of
which any Warrantholder shall have notified the Company in writing. Any notice
or other document required or permitted to be given or delivered to holders of
record of outstanding Warrant Shares shall be delivered at, or sent by certified
or registered mail to, each such holder at such holder's address as the same
appears on the stock records of the Company. Any notice or other document
required or permitted to be given or delivered to the Company, other than such
notice or documents required to be delivered to the Warrant Office, shall be
delivered at, or sent by certified or registered mail to, the office of the
Company at 9677 Tradeport Drive, Orlando, Florida 32827, or such other address
within the United States of America as shall have been furnished by the Company
to the Warrantholders and the holders of record of Warrant Shares. Any notice or
other document sent by certified or registered mail, return receipt requested,
shall be deemed to have been delivered and received when sent if the receipt is
appropriately completed and returned. Notices or documents delivered in any
other manner than as set forth above shall be deemed to have been delivered only
when and if received.
ARTICLE 9
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 10
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
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ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
ARTICLE 11
SUCCESSORS AND ASSIGNS
The rights and obligations of the parties hereunder shall be binding
upon and inure to the benefit of their respective successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 15th day of January, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
-------------------------------------------
Robert Shaw
President and Chief Executive Officer
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SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
------------------------------------
Signature Guaranteed:
Dated:
----------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
------------------------------------
Signature Guaranteed:
Dated:
----------------------------
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EXHIBIT 4.4
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, MICHAEL W. POOLE TRUST,
(together with its successors and permitted assigns, "Holder"), is entitled to
purchase from World Commerce Online, Inc., a Nevada corporation (the "Company"),
at any time and from time to time prior to 5 P.M. local time at the place where
the Warrant Office hereinafter referred to is located on or before January 14,
2009, 100,000 duly authorized, validly issued, fully paid and nonassessable
shares of common stock, par value $.001 per share, of the Company ("Common
Stock"), at the Current Warrant Price (as hereinafter defined) in lawful money
of the United States of America. The purchase price hereunder at any time of a
single share of Common Stock is referred to herein as the "Current Warrant
Price." Initially, and until adjustment in the manner hereinafter provided, the
Current Warrant Price with respect to such 100,000 shares shall be $2.00 per
share. The number of shares of Common Stock purchasable hereunder and the
Current Warrant Price are subject to adjustment from time to time in the manner
provided in Article 4 below. Certain terms in this Warrant are defined in
Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, Holder shall deliver to the
Company at the Warrant Office designated pursuant to Section 2.1: (i) a written
notice, in substantially the form of the Subscription Notice appearing at the
end of this Warrant, of such Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
the nature of payment, whether by check or by this Warrant (pursuant to Section
1.4) or by a combination thereof; (ii) a certified or official bank check
payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
<PAGE> 2
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
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"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc. that such registration is not required."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof as shall be reasonably acceptable to the Company,
the securities represented thereby need no longer be subject to the restrictions
contained in Article 3 below. The provisions of Article 3 below shall be binding
upon all subsequent holders of this Warrant.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article 2.
SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books
at the Warrant Office for the registration and transfer of this Warrant, and,
subject to the provisions of Article 3 below, this Warrant and all rights
hereunder are transferable, in whole or in part, on said books at said office,
upon surrender of this Warrant at said office, together with a written
assignment of this Warrant duly executed by the holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. A Warrant may be
exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued. No holder of this Warrant may divide this or any
other Warrant into a Warrant exercisable into less than 10,000 shares of Common
Stock.
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SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant or any
new Warrant hereunder.
ARTICLE 3
RESTRICTIONS ON EXERCISE
AND TRANSFER; REGISTRATION RIGHTS
SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The holder of this
Warrant, as of the date of issuance hereof, represents to the Company that it is
not acquiring the Warrant with a view to the distribution thereof.
Notwithstanding any provisions contained in this Warrant to the contrary, this
Warrant and the related Warrant Shares shall not be transferable except pursuant
to the proviso contained in the following sentence or upon the conditions
specified in this Article 3, which conditions are intended, among other things,
to insure compliance with the provisions of the Act and applicable state law in
respect of the transfer of this Warrant or such Warrant Shares. The holder of
this Warrant, by its acceptance hereof, agrees that it will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of such holder's counsel reasonably satisfactory to the Company (as such
opinion and such counsel are described in Section 3.2 below) or until
registration of such Warrant Shares under the Act has become effective or after
a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule
144 or Rule 144A under the Act.
SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The
holder of this Warrant, by its acceptance hereof, agrees that prior to any
transfer of this Warrant or of the related Warrant Shares (other than pursuant
to a registration under the Act), such holder will give written notice to the
Company of its intention to effect such transfer, together with an opinion of
counsel for such holder as shall be reasonably acceptable to the Company, to the
effect that the proposed transfer of this Warrant and/or such Warrant Shares may
be effected without registration under the Act or applicable state law. Upon
delivery of such notice and opinion to the Company, the holder of this Warrant
or such Warrant Shares shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice delivered by such holder to the Company; PROVIDED, HOWEVER, that
if such method of disposition would, in the opinion of such counsel, require
that the Company take any reasonable action and/or execute and file with the
Commission and/or any state securities authority with jurisdiction and/or
deliver to the Warrantholder or any other person any form or document (other
than a registration statement under the Act or under any state securities laws
or any information requirements pursuant to Regulation D) in order to establish
the entitlement of the holder of this Warrant to take advantage of such method
of disposition, the Company agrees, at its expense, to take any such reasonable
action and/or execute and file and/or deliver any such form or document.
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SECTION 3.3. "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to the expiration of the
Warrants, proposes to register any of its equity securities (as defined in the
Act), other than securities which are convertible into shares of Common Stock,
under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)
or on any other form upon which may be registered securities similar to the
Warrant Shares, it will at each such time give written notice at least 30 days
prior to the filing of the registration statement to all Warrantholders of its
intention so to do. Such notice shall specify the proposed date of the filing of
the registration statement and advise each Warrantholder of its right to
participate therein. Upon the written request of any Warrantholder given prior
to the proposed date of filing set forth in such notice, the Company will cause
each Warrant Share which the Company has been requested to register by such
Warrantholder to be registered under the Act, all to the extent requisite to
permit the sale or other disposition by such Warrantholder of the Warrant Shares
so registered.
(b) If, in the written opinion of the underwriter or
underwriters managing the public offering which is the subject of a registration
pursuant to Section 3.3(a) above (or in the event that such distribution shall
not be underwritten, in the written opinion of an investment banking firm of
recognized standing satisfactory to the Warrantholders), the total amount of the
securities to be so registered, when added to the total amount of Warrant Shares
which the Warrantholders have requested to be registered pursuant to Section
3.3(a) above, will exceed the maximum amount of securities of the Company which
can be marketed: (i) at a price reasonably related to their then current market
value; or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall have the right to exclude from such
registration such number of Warrant Shares which it would otherwise be required
to register pursuant to Section 3.3(a) above as is necessary to reduce the total
amount of securities to be so registered to the maximum amount of securities
which can be so marketed; PROVIDED, HOWEVER, that if the securities (other than
the Warrant Shares) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only cut back Warrant Shares
pro rata with the securities held by such other persons (it being agreed that in
the case where such registration is to be effected as a result of the exercise
by a holder of the Company's securities of such holder's right to cause such
securities to be so registered, such pro rata cut back shall include the
Company).
SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the
Company is obligated by the provisions of this Article 3 to effect the
registration of any Warrant Shares under the Act, as expeditiously as possible
the Company will:
(a) as expeditiously prepare and file with the Commission a
registration statement with respect to such Warrant Shares and use its best
efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the securities covered by the
registration statement; PROVIDED, HOWEVER, that in the event that the Warrant
Shares covered by such registration statement are not to be sold to or through
underwriters acting for the Company, the Company shall not be required to keep
such registration statement in effect, or to prepare and file any amendments or
supplements thereto, after the expiration of six months following the date on
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which such registration statement becomes effective under the Act or such longer
period during which the Commission requires that such registration statement be
kept effective with respect to any of the Warrant Shares so registered;
(b) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Act
with respect to the disposition of all Warrant Shares covered by such
registration statement, whenever the Warrantholders for whom such Warrant Shares
are registered or are to be registered shall desire to dispose of the same,
subject, however to the proviso contained in Section 3.4(a) above; PROVIDED,
HOWEVER, that in any event the Company's obligations under this Section 3.4(b)
shall terminate 90 days after the effective date of any such registration
statement if none of the Warrant Shares registered thereunder shall have been
sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares;
SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses
of all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Article 3 shall be paid for by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.6. INFORMATION FROM WARRANTHOLDERS. Notices and requests
delivered by Warrantholders to the Company pursuant to this Article 3 shall
contain such information regarding the Warrant Shares and the intended method of
disposition thereof as shall reasonably be required in connection with the
action to be taken.
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SECTION 3.7. COMPANY'S INDEMNIFICATION. In the event of any
registration under the Act of any Warrant Shares pursuant to this Article 3, the
Company hereby agrees to indemnify and hold harmless each Warrantholder
disposing of such Warrant Shares and each other person, if any, who controls
such Warrantholder within the meaning of Section 15 of the Act and each other
person (including underwriters) who participates in the offering of such Warrant
Shares against any losses, claims, damages or liabilities, joint or several, to
which such Warrantholder or controlling person or participating person may
become subject under the Act or otherwise, in so far as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Warrant Shares were registered under the Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
Warrantholder and each such controlling person or participating person for any
legal or any other expenses incurred by such Warrantholder or such controlling
person or participating person in connection with investigating or defending any
such loss, claim, damage, liability or proceeding; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon: (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Warrantholder or such controlling
or participating person, as the case may be, specifically for use in the
preparation thereof; or (b) an untrue statement or alleged untrue statement,
omission or alleged omission in a prospectus if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the prospectus which amendment or supplement is delivered to such
Warrantholder and such Warrantholder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of Warrant
Shares to the person asserting such loss, claim, damage, liability or expense.
SECTION 3.8. WARRANTHOLDER'S INDEMNIFICATIONS. If the Company so
requests, each Warrantholder for whom Warrant Shares are to be so registered
shall execute an agreement or agreements, whereby such Warrantholder agrees to
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of Section 15 of the Act in respect
of such registration statement and each other person, if any, which controls the
Company within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such other person or such
person controlling the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceeding in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Warrant Shares were registered under the
Act, in any preliminary prospectus or final prospectus contained therein or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
which, in each such case, has been made in or omitted from such registration
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statement, said preliminary or final prospectus or said amendment or supplement
in reliance upon, and in conformity with, information furnished to the Company
by such Warrantholder specifically for use in the preparation thereof. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
SECTION 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification; and (b) unless, in such indemnified party's reasonable
judgment, a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, HOWEVER, that the failure of an indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 3.9 with respect to such indemnified party,
except to the extent that the indemnifying party is actually prejudiced by such
failure. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
Sections 3.7 and 3.8 above is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.10. PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either: (i) there will be available adequate current public information with
respect to the Company as required by said Rules; or (ii) if such information is
not available the Company will use its best efforts to make such information
available without delay.
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ARTICLE 4
ANTI-DILUTION PROVISIONS
SECTION 4.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 4.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.3. EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
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thereafter be entitled to purchase pursuant to this Warrant (in lieu of the
number of shares of Common Stock which such holder would have been entitled to
purchase immediately prior to such consolidation, merger, sale or conveyance)
the shares of stock or other securities or property to which such number of
shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
to that which would have been payable if such number of shares of Common Stock
had been purchased by exercise of this Warrant immediately prior thereto. In
case of any such consolidation, merger, sale or conveyance, an appropriate
provision shall be made with respect to the rights and interests thereafter of
any holder of this Warrant, to the end that all the provisions of this Warrant
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect any
such consolidation, merger, sale or conveyance unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or purchasing such assets
shall assume by written instrument, executed and mailed or delivered to the
holder of this Warrant, the obligation to deliver to such holder such shares of
stock or other securities or property as, in accordance with the foregoing
provisions, such Warrantholder may be entitled to receive, which instrument
shall contain the express assumption by such successor corporation of the due
and punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
SECTION 4.4. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 4.2 above) while this Warrant remains
outstanding, then, as a condition of such reorganization or reclassification,
lawful and adequate provision shall be made whereby the holder of this Warrant
shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of
the number of shares of Common Stock which such holder would have been entitled
to purchase immediately prior to such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to which
such number of shares of Common Stock would have been entitled at the time of
such reorganization or reclassification, at an aggregate purchase price equal to
that which would have been payable if such number of shares of Common Stock had
been purchased immediately prior to such reorganization or reclassification. In
case of any such capital reorganization or reclassification, appropriate
provision shall be made with respect to the rights and interests thereafter of
the holders of Warrants, to the end that all the provisions of the Warrants
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of the Warrants.
SECTION 4.5. STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the holder of this
Warrant by reason of other events herein set forth, then and in each such case
the Company will promptly prepare a schedule setting forth the adjusted Current
Warrant Price and the adjusted number of shares purchasable hereunder, or
specifying the other shares of stock, other securities or property and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
schedule to the registered holder of this Warrant.
SECTION 4.6. NOTIFICATIONS BY THE COMPANY. In case at any time the
Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes);
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(b) to effect any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(c) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more such cases,
the Company shall give written notice to the registered holder of this Warrant
of the date on which: (i) the transfer books of the Company shall close or a
record date shall be taken for such dividend; (ii) a record date shall be taken
to determine stockholders entitled to notice of and to vote at any meeting of
stockholders at which any such proposed reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding-up is
to be considered; or (iii) such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also specify the date as of which the
holders of Common Stock of record shall participate in such dividend, or shall
be entitled to vote on or exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up, as the case may
be. Such written notice shall be given not less than 10 days prior to such date
on which the transfer books of the Company shall close or a record date shall be
taken or any event shall occur, as the case may be, and such notice may state
that any such action will be taken only if certain events specified in such
notice (such as the clearing of proxy material by the Commission or an
affirmative vote of stockholders) occur prior thereto.
ARTICLE 5
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
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"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially $2.00. The Current Warrant Price is subject to adjustment from time to
time pursuant to Article 4 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 4 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of the Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right initially to purchase an aggregate of 100,000 shares of Common Stock and
all warrants issued in substitution or subdivision hereof.
ARTICLE 6
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
12
<PAGE> 13
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 7
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 8
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to,
such Holder at the last address shown on the books of the Company maintained at
the Warrant Office for the registration and registration of transfer of the
Warrants or at any more recent address of which any Warrantholder shall have
13
<PAGE> 14
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to holders of record of outstanding Warrant
Shares shall be delivered at, or sent by certified or registered mail to, each
such holder at such holder's address as the same appears on the stock records of
the Company. Any notice or other document required or permitted to be given or
delivered to the Company, other than such notice or documents required to be
delivered to the Warrant Office, shall be delivered at, or sent by certified or
registered mail to, the office of the Company at 9677 Tradeport Drive, Orlando,
Florida 32827, or such other address within the United States of America as
shall have been furnished by the Company to the Warrantholders and the holders
of record of Warrant Shares. Any notice or other document sent by certified or
registered mail, return receipt requested, shall be deemed to have been
delivered and received when sent if the receipt is appropriately completed and
returned. Notices or documents delivered in any other manner than as set forth
above shall be deemed to have been delivered only when and if received.
ARTICLE 9
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 10
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
14
<PAGE> 15
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
ARTICLE 11
SUCCESSORS AND ASSIGNS
The rights and obligations of the parties hereunder shall be binding
upon and inure to the benefit of their respective successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 15th day of January, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
--------------------------------------------
Robert Shaw
President and Chief Executive Officer
15
<PAGE> 16
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
-----------------------
Signature Guaranteed:
Dated:
-----------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
-----------------------
Signature Guaranteed:
Dated:
-----------------------
16
<PAGE> 1
EXHIBIT 4.5
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that for value received, NOVELLE CONSULTING, L.L.C.
(together with its successors and permitted assigns, "Holder"), is entitled to
purchase from World Commerce Online, Inc., a Delaware corporation (the
"Company"), at any time and from time to time beginning April 22, 1999 and
ending at 5 P.M. local time at the place where the Warrant Office hereinafter
referred to is located on or before April 21, 2003, 250,000 duly authorized,
validly issued, fully paid and nonassessable shares of common stock, par value
$.001 per share, of the Company ("Common Stock"), at the Current Warrant Price
in lawful money of the United States of America. The purchase price hereunder at
any time of a single share of Common Stock is referred to herein as the "Current
Warrant Price." Initially, and until adjustment in the manner hereinafter
provided, the Current Warrant Price with respect to such 250,000 shares shall be
$12.38 per share. The number of shares of Common Stock purchasable hereunder and
the Current Warrant Price are subject to adjustment from time to time in the
manner provided in Article 4 below. Certain terms in this Warrant are defined in
Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, the Holder shall deliver to
the Company at the Warrant Office designated pursuant to Section 2.1: (i) a
written notice, in substantially the form of the Subscription Notice appearing
at the end of this Warrant, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased
and the nature of payment, whether by check or by this Warrant (pursuant to
Section 1.4) or by a combination thereof; (ii) a certified or official bank
check payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
<PAGE> 2
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Warrant Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc., that such registration is not required.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
-2-
<PAGE> 3
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is initially registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of evidence satisfactory to the
Company that this Warrant has been transferred as provided in Section 2.3.
SECTION 2.3. TRANSFER OF WARRANT. This Warrant and all rights hereunder
may be alienated, assigned, pledged or otherwise transferred, in whole or in
part.
ARTICLE 3
ANTI-DILUTION PROVISIONS
SECTION 3.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 3. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 3.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
ARTICLE 4
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
-3-
<PAGE> 4
"CURRENT WARRANT PRICE": (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time.
The Current Warrant Price is subject to adjustment from time to time pursuant to
Article 3 above.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 3 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right to purchase an aggregate of 250,000 shares of Common Stock and all
warrants issued in substitution or subdivision hereof.
ARTICLE 5
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
-4-
<PAGE> 5
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 6
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 7
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to
Holder at the last address shown on the books of the Company maintained at the
Warrant Office for the registration of the Warrants or at any more recent
address of which Warrantholder shall have notified the Company in writing. Any
notice or other document required or permitted to be given or delivered to
holders of record of outstanding Warrant Shares shall be delivered at, or sent
-5-
<PAGE> 6
by certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the office of
the Company at 9677 Tradeport Drive, Orlando, Florida 32827, or such other
address within the United States of America as shall have been furnished by the
Company to the Warrantholders and the holders of record of Warrant Shares. Any
notice or other document sent by certified or registered mail, return receipt
requested, shall be deemed to have been delivered and received when sent if the
receipt is appropriately completed and returned. Notices or documents delivered
in any other manner than as set forth above shall be deemed to have been
delivered only when and if received.
ARTICLE 8
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 9
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 22nd day of April 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
----------------------------------------
Robert Shaw
President and Chief Executive Officer
-7-
<PAGE> 8
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
-------------------------------
Signature Guaranteed:
Dated:
-------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
-------------------------------
Signature Guaranteed:
Dated:
-------------------------
<PAGE> 1
EXHIBIT 4.6
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, KENNETH B. COBB II,
(together with his successors and permitted assigns, "Holder"), is entitled to
purchase from World Commerce Online, Inc., a Nevada corporation (the "Company"),
at any time and from time to time beginning on January 1, 2000 and ending at 5
P.M. local time at the place where the Warrant Office hereinafter referred to is
located on December 31, 2004, 50,000 duly authorized, validly issued, fully paid
and nonassessable shares of common stock, par value $.001 per share, of the
Company ("Common Stock"), at the Current Warrant Price (as hereinafter defined)
in lawful money of the United States of America. The purchase price hereunder at
any time of a single share of Common Stock is referred to herein as the "Current
Warrant Price." Initially, and until adjustment in the manner hereinafter
provided, the Current Warrant Price with respect to such 50,000 shares shall be
$2.00 per share. The number of shares of Common Stock purchasable hereunder and
the Current Warrant Price are subject to adjustment from time to time in the
manner provided in Article 4 below. Certain terms in this Warrant are defined in
Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, Holder shall deliver to the
Company at the Warrant Office designated pursuant to Section 2.1: (i) a written
notice, in substantially the form of the Subscription Notice appearing at the
end of this Warrant, of such Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
the nature of payment, whether by check or by this Warrant (pursuant to Section
1.4) or by a combination thereof; (ii) a certified or official bank check
payable to the order of the Company and/or a cancellation of a number of
<PAGE> 2
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
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"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc. that such registration is not required."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof as shall be reasonably acceptable to the Company,
the securities represented thereby need no longer be subject to the restrictions
contained in Article 3 below. The provisions of Article 3 below shall be binding
upon all subsequent holders of this Warrant.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article 2.
SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books
at the Warrant Office for the registration and transfer of this Warrant, and,
subject to the provisions of Article 3 below, this Warrant and all rights
hereunder are transferable, in whole or in part, on said books at said office,
upon surrender of this Warrant at said office, together with a written
assignment of this Warrant duly executed by the holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. A Warrant may be
exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued. No holder of this Warrant may divide this or any
other Warrant into a Warrant exercisable into less than 10,000 shares of Common
Stock.
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<PAGE> 4
SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant or any
new Warrant hereunder.
ARTICLE 3
RESTRICTIONS ON EXERCISE
AND TRANSFER; REGISTRATION RIGHTS
SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The holder of this
Warrant, as of the date of issuance hereof, represents to the Company that it is
not acquiring the Warrant with a view to the distribution thereof.
Notwithstanding any provisions contained in this Warrant to the contrary, this
Warrant and the related Warrant Shares shall not be transferable except pursuant
to the proviso contained in the following sentence or upon the conditions
specified in this Article 3, which conditions are intended, among other things,
to insure compliance with the provisions of the Act and applicable state law in
respect of the transfer of this Warrant or such Warrant Shares. The holder of
this Warrant, by its acceptance hereof, agrees that it will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of such holder's counsel reasonably satisfactory to the Company (as such
opinion and such counsel are described in Section 3.2 below) or until
registration of such Warrant Shares under the Act has become effective or after
a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule
144 or Rule 144A under the Act.
SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The
holder of this Warrant, by its acceptance hereof, agrees that prior to any
transfer of this Warrant or of the related Warrant Shares (other than pursuant
to a registration under the Act), such holder will give written notice to the
Company of its intention to effect such transfer, together with an opinion of
counsel for such holder as shall be reasonably acceptable to the Company, to the
effect that the proposed transfer of this Warrant and/or such Warrant Shares may
be effected without registration under the Act or applicable state law. Upon
delivery of such notice and opinion to the Company, the holder of this Warrant
or such Warrant Shares shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice delivered by such holder to the Company; PROVIDED, HOWEVER, that
if such method of disposition would, in the opinion of such counsel, require
that the Company take any reasonable action and/or execute and file with the
Commission and/or any state securities authority with jurisdiction and/or
deliver to the Warrantholder or any other person any form or document (other
than a registration statement under the Act or under any state securities laws
or any information requirements pursuant to Regulation D) in order to establish
the entitlement of the holder of this Warrant to take advantage of such method
of disposition, the Company agrees, at its expense, to take any such reasonable
action and/or execute and file and/or deliver any such form or document.
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<PAGE> 5
SECTION 3.3. "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to the expiration of the
Warrants, proposes to register any of its equity securities (as defined in the
Act), other than securities which are convertible into shares of Common Stock,
under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)
or on any other form upon which may be registered securities similar to the
Warrant Shares, it will at each such time give written notice at least 30 days
prior to the filing of the registration statement to all Warrantholders of its
intention so to do. Such notice shall specify the proposed date of the filing of
the registration statement and advise each Warrantholder of its right to
participate therein. Upon the written request of any Warrantholder given prior
to the proposed date of filing set forth in such notice, the Company will cause
each Warrant Share which the Company has been requested to register by such
Warrantholder to be registered under the Act, all to the extent requisite to
permit the sale or other disposition by such Warrantholder of the Warrant Shares
so registered.
(b) If, in the written opinion of the underwriter or
underwriters managing the public offering which is the subject of a registration
pursuant to Section 3.3(a) above (or in the event that such distribution shall
not be underwritten, in the written opinion of an investment banking firm of
recognized standing satisfactory to the Warrantholders), the total amount of the
securities to be so registered, when added to the total amount of Warrant Shares
which the Warrantholders have requested to be registered pursuant to Section
3.3(a) above, will exceed the maximum amount of securities of the Company which
can be marketed: (i) at a price reasonably related to their then current market
value; or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall have the right to exclude from such
registration such number of Warrant Shares which it would otherwise be required
to register pursuant to Section 3.3(a) above as is necessary to reduce the total
amount of securities to be so registered to the maximum amount of securities
which can be so marketed; PROVIDED, HOWEVER, that if the securities (other than
the Warrant Shares) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only cut back Warrant Shares
pro rata with the securities held by such other persons (it being agreed that in
the case where such registration is to be effected as a result of the exercise
by a holder of the Company's securities of such holder's right to cause such
securities to be so registered, such pro rata cut back shall include the
Company).
SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the
Company is obligated by the provisions of this Article 3 to effect the
registration of any Warrant Shares under the Act, as expeditiously as possible
the Company will:
(a) as expeditiously prepare and file with the Commission a
registration statement with respect to such Warrant Shares and use its best
efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the securities covered by the
registration statement; PROVIDED, HOWEVER, that in the event that the Warrant
Shares covered by such registration statement are not to be sold to or through
underwriters acting for the Company, the Company shall not be required to keep
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<PAGE> 6
such registration statement in effect, or to prepare and file any amendments or
supplements thereto, after the expiration of six months following the date on
which such registration statement becomes effective under the Act or such longer
period during which the Commission requires that such registration statement be
kept effective with respect to any of the Warrant Shares so registered;
(b) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Act
with respect to the disposition of all Warrant Shares covered by such
registration statement, whenever the Warrantholders for whom such Warrant Shares
are registered or are to be registered shall desire to dispose of the same,
subject, however to the proviso contained in Section 3.4(a) above; PROVIDED,
HOWEVER, that in any event the Company's obligations under this Section 3.4(b)
shall terminate 90 days after the effective date of any such registration
statement if none of the Warrant Shares registered thereunder shall have been
sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares;
SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses
of all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Article 3 shall be paid for by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.6. INFORMATION FROM WARRANTHOLDERS. Notices and requests
delivered by Warrantholders to the Company pursuant to this Article 3 shall
contain such information regarding the Warrant Shares and the intended method of
disposition thereof as shall reasonably be required in connection with the
action to be taken.
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<PAGE> 7
SECTION 3.7. COMPANY'S INDEMNIFICATION. In the event of any
registration under the Act of any Warrant Shares pursuant to this Article 3, the
Company hereby agrees to indemnify and hold harmless each Warrantholder
disposing of such Warrant Shares and each other person, if any, who controls
such Warrantholder within the meaning of Section 15 of the Act and each other
person (including underwriters) who participates in the offering of such Warrant
Shares against any losses, claims, damages or liabilities, joint or several, to
which such Warrantholder or controlling person or participating person may
become subject under the Act or otherwise, in so far as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Warrant Shares were registered under the Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
Warrantholder and each such controlling person or participating person for any
legal or any other expenses incurred by such Warrantholder or such controlling
person or participating person in connection with investigating or defending any
such loss, claim, damage, liability or proceeding; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon: (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Warrantholder or such controlling
or participating person, as the case may be, specifically for use in the
preparation thereof; or (b) an untrue statement or alleged untrue statement,
omission or alleged omission in a prospectus if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the prospectus which amendment or supplement is delivered to such
Warrantholder and such Warrantholder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of Warrant
Shares to the person asserting such loss, claim, damage, liability or expense.
SECTION 3.8. WARRANTHOLDER'S INDEMNIFICATIONS. If the Company so
requests, each Warrantholder for whom Warrant Shares are to be so registered
shall execute an agreement or agreements, whereby such Warrantholder agrees to
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of Section 15 of the Act in respect
of such registration statement and each other person, if any, which controls the
Company within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such other person or such
person controlling the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceeding in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Warrant Shares were registered under the
Act, in any preliminary prospectus or final prospectus contained therein or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
which, in each such case, has been made in or omitted from such registration
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statement, said preliminary or final prospectus or said amendment or supplement
in reliance upon, and in conformity with, information furnished to the Company
by such Warrantholder specifically for use in the preparation thereof. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
SECTION 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification; and (b) unless, in such indemnified party's reasonable
judgment, a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, HOWEVER, that the failure of an indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 3.9 with respect to such indemnified party,
except to the extent that the indemnifying party is actually prejudiced by such
failure. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
Sections 3.7 and 3.8 above is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.10. PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either: (i) there will be available adequate current public information with
respect to the Company as required by said Rules; or (ii) if such information is
not available the Company will use its best efforts to make such information
available without delay.
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ARTICLE 4
ANTI-DILUTION PROVISIONS
SECTION 4.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 4.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.3. EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
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thereafter be entitled to purchase pursuant to this Warrant (in lieu of the
number of shares of Common Stock which such holder would have been entitled to
purchase immediately prior to such consolidation, merger, sale or conveyance)
the shares of stock or other securities or property to which such number of
shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
to that which would have been payable if such number of shares of Common Stock
had been purchased by exercise of this Warrant immediately prior thereto. In
case of any such consolidation, merger, sale or conveyance, an appropriate
provision shall be made with respect to the rights and interests thereafter of
any holder of this Warrant, to the end that all the provisions of this Warrant
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect any
such consolidation, merger, sale or conveyance unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or purchasing such assets
shall assume by written instrument, executed and mailed or delivered to the
holder of this Warrant, the obligation to deliver to such holder such shares of
stock or other securities or property as, in accordance with the foregoing
provisions, such Warrantholder may be entitled to receive, which instrument
shall contain the express assumption by such successor corporation of the due
and punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
SECTION 4.4. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 4.2 above) while this Warrant remains
outstanding, then, as a condition of such reorganization or reclassification,
lawful and adequate provision shall be made whereby the holder of this Warrant
shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of
the number of shares of Common Stock which such holder would have been entitled
to purchase immediately prior to such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to which
such number of shares of Common Stock would have been entitled at the time of
such reorganization or reclassification, at an aggregate purchase price equal to
that which would have been payable if such number of shares of Common Stock had
been purchased immediately prior to such reorganization or reclassification. In
case of any such capital reorganization or reclassification, appropriate
provision shall be made with respect to the rights and interests thereafter of
the holders of Warrants, to the end that all the provisions of the Warrants
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of the Warrants.
SECTION 4.5. STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the holder of this
Warrant by reason of other events herein set forth, then and in each such case
the Company will promptly prepare a schedule setting forth the adjusted Current
Warrant Price and the adjusted number of shares purchasable hereunder, or
specifying the other shares of stock, other securities or property and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
schedule to the registered holder of this Warrant.
SECTION 4.6. NOTIFICATIONS BY THE COMPANY. In case at any time the
Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes);
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(b) to effect any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(c) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more such cases,
the Company shall give written notice to the registered holder of this Warrant
of the date on which: (i) the transfer books of the Company shall close or a
record date shall be taken for such dividend; (ii) a record date shall be taken
to determine stockholders entitled to notice of and to vote at any meeting of
stockholders at which any such proposed reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding-up is
to be considered; or (iii) such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also specify the date as of which the
holders of Common Stock of record shall participate in such dividend, or shall
be entitled to vote on or exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up, as the case may
be. Such written notice shall be given not less than 10 days prior to such date
on which the transfer books of the Company shall close or a record date shall be
taken or any event shall occur, as the case may be, and such notice may state
that any such action will be taken only if certain events specified in such
notice (such as the clearing of proxy material by the Commission or an
affirmative vote of stockholders) occur prior thereto.
ARTICLE 5
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
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<PAGE> 12
"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially $2.00. The Current Warrant Price is subject to adjustment from time to
time pursuant to Article 4 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 4 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of the Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right initially to purchase an aggregate of 50,000 shares of Common Stock and
all warrants issued in substitution or subdivision hereof.
ARTICLE 6
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
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(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 7
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 8
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to,
such Holder at the last address shown on the books of the Company maintained at
the Warrant Office for the registration and registration of transfer of the
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<PAGE> 14
Warrants or at any more recent address of which any Warrantholder shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to holders of record of outstanding Warrant
Shares shall be delivered at, or sent by certified or registered mail to, each
such holder at such holder's address as the same appears on the stock records of
the Company. Any notice or other document required or permitted to be given or
delivered to the Company, other than such notice or documents required to be
delivered to the Warrant Office, shall be delivered at, or sent by certified or
registered mail to, the office of the Company at 9677 Tradeport Drive, Orlando,
Florida 32827, or such other address within the United States of America as
shall have been furnished by the Company to the Warrantholders and the holders
of record of Warrant Shares. Any notice or other document sent by certified or
registered mail, return receipt requested, shall be deemed to have been
delivered and received when sent if the receipt is appropriately completed and
returned. Notices or documents delivered in any other manner than as set forth
above shall be deemed to have been delivered only when and if received.
ARTICLE 9
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 10
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
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<PAGE> 15
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
ARTICLE 11
SUCCESSORS AND ASSIGNS
The rights and obligations of the parties hereunder shall be binding
upon and inure to the benefit of their respective successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 20th day of September, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
----------------------------------------------
Robert Shaw
President and Chief Executive Officer
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<PAGE> 16
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
------------------------
Signature Guaranteed:
Dated:
-----------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
------------------------
Signature Guaranteed:
Dated:
-----------------------------
16
<PAGE> 1
EXHIBIT 4.7
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, KENNETH B. COBB II,
(together with his successors and permitted assigns, "Holder"), is entitled to
purchase from World Commerce Online, Inc., a Nevada corporation (the "Company"),
at any time and from time to time beginning on August 1, 2000 and ending at 5
P.M. local time at the place where the Warrant Office hereinafter referred to is
located on July 29, 2005, 50,000 duly authorized, validly issued, fully paid and
nonassessable shares of common stock, par value $.001 per share, of the Company
("Common Stock"), at the Current Warrant Price (as hereinafter defined) in
lawful money of the United States of America. The purchase price hereunder at
any time of a single share of Common Stock is referred to herein as the "Current
Warrant Price." Initially, and until adjustment in the manner hereinafter
provided, the Current Warrant Price with respect to such 50,000 shares shall be
$8.00 per share. The number of shares of Common Stock purchasable hereunder and
the Current Warrant Price are subject to adjustment from time to time in the
manner provided in Article 4 below. Certain terms in this Warrant are defined in
Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, Holder shall deliver to the
Company at the Warrant Office designated pursuant to Section 2.1: (i) a written
notice, in substantially the form of the Subscription Notice appearing at the
end of this Warrant, of such Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
the nature of payment, whether by check or by this Warrant (pursuant to Section
1.4) or by a combination thereof; (ii) a certified or official bank check
payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
<PAGE> 2
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
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<PAGE> 3
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc. that such registration is not required."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof as shall be reasonably acceptable to the Company,
the securities represented thereby need no longer be subject to the restrictions
contained in Article 3 below. The provisions of Article 3 below shall be binding
upon all subsequent holders of this Warrant.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article 2.
SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books
at the Warrant Office for the registration and transfer of this Warrant, and,
subject to the provisions of Article 3 below, this Warrant and all rights
hereunder are transferable, in whole or in part, on said books at said office,
upon surrender of this Warrant at said office, together with a written
assignment of this Warrant duly executed by the holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. A Warrant may be
exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued. No holder of this Warrant may divide this or any
other Warrant into a Warrant exercisable into less than 10,000 shares of Common
Stock.
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<PAGE> 4
SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant or any
new Warrant hereunder.
ARTICLE 3
RESTRICTIONS ON EXERCISE
AND TRANSFER; REGISTRATION RIGHTS
SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The holder of this
Warrant, as of the date of issuance hereof, represents to the Company that it is
not acquiring the Warrant with a view to the distribution thereof.
Notwithstanding any provisions contained in this Warrant to the contrary, this
Warrant and the related Warrant Shares shall not be transferable except pursuant
to the proviso contained in the following sentence or upon the conditions
specified in this Article 3, which conditions are intended, among other things,
to insure compliance with the provisions of the Act and applicable state law in
respect of the transfer of this Warrant or such Warrant Shares. The holder of
this Warrant, by its acceptance hereof, agrees that it will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of such holder's counsel reasonably satisfactory to the Company (as such
opinion and such counsel are described in Section 3.2 below) or until
registration of such Warrant Shares under the Act has become effective or after
a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule
144 or Rule 144A under the Act.
SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The
holder of this Warrant, by its acceptance hereof, agrees that prior to any
transfer of this Warrant or of the related Warrant Shares (other than pursuant
to a registration under the Act), such holder will give written notice to the
Company of its intention to effect such transfer, together with an opinion of
counsel for such holder as shall be reasonably acceptable to the Company, to the
effect that the proposed transfer of this Warrant and/or such Warrant Shares may
be effected without registration under the Act or applicable state law. Upon
delivery of such notice and opinion to the Company, the holder of this Warrant
or such Warrant Shares shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice delivered by such holder to the Company; PROVIDED, HOWEVER, that
if such method of disposition would, in the opinion of such counsel, require
that the Company take any reasonable action and/or execute and file with the
Commission and/or any state securities authority with jurisdiction and/or
deliver to the Warrantholder or any other person any form or document (other
than a registration statement under the Act or under any state securities laws
or any information requirements pursuant to Regulation D) in order to establish
the entitlement of the holder of this Warrant to take advantage of such method
of disposition, the Company agrees, at its expense, to take any such reasonable
action and/or execute and file and/or deliver any such form or document.
4
<PAGE> 5
SECTION 3.3. "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to the expiration of the
Warrants, proposes to register any of its equity securities (as defined in the
Act), other than securities which are convertible into shares of Common Stock,
under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)
or on any other form upon which may be registered securities similar to the
Warrant Shares, it will at each such time give written notice at least 30 days
prior to the filing of the registration statement to all Warrantholders of its
intention so to do. Such notice shall specify the proposed date of the filing of
the registration statement and advise each Warrantholder of its right to
participate therein. Upon the written request of any Warrantholder given prior
to the proposed date of filing set forth in such notice, the Company will cause
each Warrant Share which the Company has been requested to register by such
Warrantholder to be registered under the Act, all to the extent requisite to
permit the sale or other disposition by such Warrantholder of the Warrant Shares
so registered.
(b) If, in the written opinion of the underwriter or
underwriters managing the public offering which is the subject of a registration
pursuant to Section 3.3(a) above (or in the event that such distribution shall
not be underwritten, in the written opinion of an investment banking firm of
recognized standing satisfactory to the Warrantholders), the total amount of the
securities to be so registered, when added to the total amount of Warrant Shares
which the Warrantholders have requested to be registered pursuant to Section
3.3(a) above, will exceed the maximum amount of securities of the Company which
can be marketed: (i) at a price reasonably related to their then current market
value; or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall have the right to exclude from such
registration such number of Warrant Shares which it would otherwise be required
to register pursuant to Section 3.3(a) above as is necessary to reduce the total
amount of securities to be so registered to the maximum amount of securities
which can be so marketed; PROVIDED, HOWEVER, that if the securities (other than
the Warrant Shares) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only cut back Warrant Shares
pro rata with the securities held by such other persons (it being agreed that in
the case where such registration is to be effected as a result of the exercise
by a holder of the Company's securities of such holder's right to cause such
securities to be so registered, such pro rata cut back shall include the
Company).
SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the
Company is obligated by the provisions of this Article 3 to effect the
registration of any Warrant Shares under the Act, as expeditiously as possible
the Company will:
(a) as expeditiously prepare and file with the Commission a
registration statement with respect to such Warrant Shares and use its best
efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the securities covered by the
registration statement; PROVIDED, HOWEVER, that in the event that the Warrant
Shares covered by such registration statement are not to be sold to or through
underwriters acting for the Company, the Company shall not be required to keep
such registration statement in effect, or to prepare and file any amendments or
supplements thereto, after the expiration of six months following the date on
which such registration statement becomes effective under the Act or such longer
period during which the Commission requires that such registration statement be
kept effective with respect to any of the Warrant Shares so registered;
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<PAGE> 6
(b) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Act
with respect to the disposition of all Warrant Shares covered by such
registration statement, whenever the Warrantholders for whom such Warrant Shares
are registered or are to be registered shall desire to dispose of the same,
subject, however to the proviso contained in Section 3.4(a) above; PROVIDED,
HOWEVER, that in any event the Company's obligations under this Section 3.4(b)
shall terminate 90 days after the effective date of any such registration
statement if none of the Warrant Shares registered thereunder shall have been
sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares;
SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses
of all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Article 3 shall be paid for by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.6. INFORMATION FROM WARRANTHOLDERS. Notices and requests
delivered by Warrantholders to the Company pursuant to this Article 3 shall
contain such information regarding the Warrant Shares and the intended method of
disposition thereof as shall reasonably be required in connection with the
action to be taken.
6
<PAGE> 7
SECTION 3.7. COMPANY'S INDEMNIFICATION. In the event of any
registration under the Act of any Warrant Shares pursuant to this Article 3, the
Company hereby agrees to indemnify and hold harmless each Warrantholder
disposing of such Warrant Shares and each other person, if any, who controls
such Warrantholder within the meaning of Section 15 of the Act and each other
person (including underwriters) who participates in the offering of such Warrant
Shares against any losses, claims, damages or liabilities, joint or several, to
which such Warrantholder or controlling person or participating person may
become subject under the Act or otherwise, in so far as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Warrant Shares were registered under the Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
Warrantholder and each such controlling person or participating person for any
legal or any other expenses incurred by such Warrantholder or such controlling
person or participating person in connection with investigating or defending any
such loss, claim, damage, liability or proceeding; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon: (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Warrantholder or such controlling
or participating person, as the case may be, specifically for use in the
preparation thereof; or (b) an untrue statement or alleged untrue statement,
omission or alleged omission in a prospectus if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the prospectus which amendment or supplement is delivered to such
Warrantholder and such Warrantholder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of Warrant
Shares to the person asserting such loss, claim, damage, liability or expense.
SECTION 3.8. WARRANTHOLDER'S INDEMNIFICATIONS. If the Company so
requests, each Warrantholder for whom Warrant Shares are to be so registered
shall execute an agreement or agreements, whereby such Warrantholder agrees to
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of Section 15 of the Act in respect
of such registration statement and each other person, if any, which controls the
Company within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such other person or such
person controlling the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceeding in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Warrant Shares were registered under the
Act, in any preliminary prospectus or final prospectus contained therein or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
which, in each such case, has been made in or omitted from such registration
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<PAGE> 8
statement, said preliminary or final prospectus or said amendment or supplement
in reliance upon, and in conformity with, information furnished to the Company
by such Warrantholder specifically for use in the preparation thereof. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
SECTION 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification; and (b) unless, in such indemnified party's reasonable
judgment, a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, HOWEVER, that the failure of an indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 3.9 with respect to such indemnified party,
except to the extent that the indemnifying party is actually prejudiced by such
failure. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
Sections 3.7 and 3.8 above is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.10. PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either: (i) there will be available adequate current public information with
respect to the Company as required by said Rules; or (ii) if such information is
not available the Company will use its best efforts to make such information
available without delay.
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ARTICLE 4
ANTI-DILUTION PROVISIONS
SECTION 4.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 4.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.3. EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
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<PAGE> 10
thereafter be entitled to purchase pursuant to this Warrant (in lieu of the
number of shares of Common Stock which such holder would have been entitled to
purchase immediately prior to such consolidation, merger, sale or conveyance)
the shares of stock or other securities or property to which such number of
shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
to that which would have been payable if such number of shares of Common Stock
had been purchased by exercise of this Warrant immediately prior thereto. In
case of any such consolidation, merger, sale or conveyance, an appropriate
provision shall be made with respect to the rights and interests thereafter of
any holder of this Warrant, to the end that all the provisions of this Warrant
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect any
such consolidation, merger, sale or conveyance unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or purchasing such assets
shall assume by written instrument, executed and mailed or delivered to the
holder of this Warrant, the obligation to deliver to such holder such shares of
stock or other securities or property as, in accordance with the foregoing
provisions, such Warrantholder may be entitled to receive, which instrument
shall contain the express assumption by such successor corporation of the due
and punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
SECTION 4.4. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 4.2 above) while this Warrant remains
outstanding, then, as a condition of such reorganization or reclassification,
lawful and adequate provision shall be made whereby the holder of this Warrant
shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of
the number of shares of Common Stock which such holder would have been entitled
to purchase immediately prior to such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to which
such number of shares of Common Stock would have been entitled at the time of
such reorganization or reclassification, at an aggregate purchase price equal to
that which would have been payable if such number of shares of Common Stock had
been purchased immediately prior to such reorganization or reclassification. In
case of any such capital reorganization or reclassification, appropriate
provision shall be made with respect to the rights and interests thereafter of
the holders of Warrants, to the end that all the provisions of the Warrants
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of the Warrants.
SECTION 4.5. STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the holder of this
Warrant by reason of other events herein set forth, then and in each such case
the Company will promptly prepare a schedule setting forth the adjusted Current
Warrant Price and the adjusted number of shares purchasable hereunder, or
specifying the other shares of stock, other securities or property and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
schedule to the registered holder of this Warrant.
SECTION 4.6. NOTIFICATIONS BY THE COMPANY. In case at any time the
Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes);
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(b) to effect any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(c) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more such cases,
the Company shall give written notice to the registered holder of this Warrant
of the date on which: (i) the transfer books of the Company shall close or a
record date shall be taken for such dividend; (ii) a record date shall be taken
to determine stockholders entitled to notice of and to vote at any meeting of
stockholders at which any such proposed reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding-up is
to be considered; or (iii) such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up shall take place,
as the case may be. Such notice shall also specify the date as of which the
holders of Common Stock of record shall participate in such dividend, or shall
be entitled to vote on or exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale of assets, dissolution, liquidation or winding-up, as the case may
be. Such written notice shall be given not less than 10 days prior to such date
on which the transfer books of the Company shall close or a record date shall be
taken or any event shall occur, as the case may be, and such notice may state
that any such action will be taken only if certain events specified in such
notice (such as the clearing of proxy material by the Commission or an
affirmative vote of stockholders) occur prior thereto.
ARTICLE 5
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
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"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially $8.00. The Current Warrant Price is subject to adjustment from time to
time pursuant to Article 4 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 4 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of the Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right initially to purchase an aggregate of 50,000 shares of Common Stock and
all warrants issued in substitution or subdivision hereof.
ARTICLE 6
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
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<PAGE> 13
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 7
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 8
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to,
such Holder at the last address shown on the books of the Company maintained at
the Warrant Office for the registration and registration of transfer of the
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<PAGE> 14
Warrants or at any more recent address of which any Warrantholder shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to holders of record of outstanding Warrant
Shares shall be delivered at, or sent by certified or registered mail to, each
such holder at such holder's address as the same appears on the stock records of
the Company. Any notice or other document required or permitted to be given or
delivered to the Company, other than such notice or documents required to be
delivered to the Warrant Office, shall be delivered at, or sent by certified or
registered mail to, the office of the Company at 9677 Tradeport Drive, Orlando,
Florida 32827, or such other address within the United States of America as
shall have been furnished by the Company to the Warrantholders and the holders
of record of Warrant Shares. Any notice or other document sent by certified or
registered mail, return receipt requested, shall be deemed to have been
delivered and received when sent if the receipt is appropriately completed and
returned. Notices or documents delivered in any other manner than as set forth
above shall be deemed to have been delivered only when and if received.
ARTICLE 9
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 10
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
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ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
ARTICLE 11
SUCCESSORS AND ASSIGNS
The rights and obligations of the parties hereunder shall be binding
upon and inure to the benefit of their respective successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 20th day of September, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
--------------------------------------
Robert Shaw
President and Chief Executive Officer
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SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
------------------------
Signature Guaranteed:
Dated:
-----------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
------------------------
Signature Guaranteed:
Dated:
-----------------------
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EXHIBIT 4.8
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, Charles Kremp III, a
citizen of the State of Pennsylvania (together with his permitted assigns,
"Holder"), is hereby granted, as of October 1, 1999 (the "Grant Date"), a
warrant to purchase from World Commerce Online, Inc., a Delaware corporation
(the "Company"), up to 250,000 duly authorized, validly issued, fully-paid and
nonassessable shares (the "Shares") of common stock, par value $.001 per share,
of the Company ("Common Stock"), at the Current Warrant Price (as hereinafter
defined) in lawful money of the United States of America, subject to the terms
and conditions set forth herein. The purchase price hereunder at any time of a
single share of Common Stock is referred to herein as the "Current Warrant
Price." Initially, and until adjustment in the manner hereinafter provided, the
Current Warrant Price with respect to such 250,000 shares shall be $8.00 PER
SHARE. The Warrant shall vest and become exercisable in installments. To the
extent that the Warrant has vested and become exercisable with respect to a
number of Shares as provided below, the Warrant may thereafter be exercised by
the Holder, in whole or in part, at any time or from time to time prior to six
(6) years after the Grant Date.
The following table indicates each date (the "Vesting Date") upon which
the Holder shall be entitled to exercise the Warrant with respect to the number
of Shares granted as indicated beside the date, provided that the Consulting
Agreement between the Company and Charles Kremp III entered into as of October
1, 1999 (the "Consulting Agreement") is in full force and effect and has not
been terminated prior to any applicable Vesting Date:
Number of Shares Vesting Date
---------------- ------------
20,837 Shares December 31, 1999
20,833 Shares Last day of each calendar quarter for eleven
(11) successive quarters, until September 30,
2002.
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in any period prior to each Vesting Date, and
all vesting shall occur only on the
<PAGE> 2
appropriate Vesting Date. Upon termination of the Consulting Agreement, any
unvested portion of the Warrant shall terminate and be null and void. The number
of shares of Common Stock purchasable hereunder and the Current Warrant Price
are subject to adjustment from time to time in the manner provided in Article 3
below. Certain terms in this Warrant are defined in Article 4 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, the Holder shall deliver to
the Company at the Warrant Office designated pursuant to Section 2.1: (i) a
written notice, in substantially the form of the Subscription Notice appearing
at the end of this Warrant, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased
and the nature of payment, whether by check or by this Warrant (pursuant to
Section 1.4) or by a combination thereof; (ii) a certified or official bank
check payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and
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nonassessable and, if the Common Stock is then listed on a securities exchange,
shall be duly listed thereon, subject to registration under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc., that such registration is not required.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is initially registered as the holder and
owner hereof (notwithstanding
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any notations of ownership or writing hereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of evidence satisfactory to the Company that this
Warrant has been transferred as provided in Section 2.3.
SECTION 2.3. TRANSFER OF WARRANT. This Warrant and all rights hereunder
may not be alienated, assigned, pledged or otherwise transferred, in whole or in
part, other than by Holder by will or the laws of descent and distribution, and
any attempt to make any such prohibited transfer shall be null and void.
ARTICLE 3
ANTI-DILUTION PROVISIONS
SECTION 3.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 3. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 3.2. EFFECT OF "SPLIT -UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
ARTICLE 4
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
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"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time.
The Current Warrant Price is subject to adjustment from time to time pursuant to
Article 3 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 3 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right to purchase an aggregate of 100,000 shares of Common Stock and all
warrants issued in substitution or subdivision hereof.
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ARTICLE 5
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) It will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) Before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) If any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) This Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 6
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) This transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
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(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) The Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested by them to be
inspected.
ARTICLE 7
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to
Holder at the last address shown on the books of the Company maintained at the
Warrant Office for the registration of the Warrants or at any more recent
address of which Warrantholder shall have notified the Company in writing. Any
notice or other document required or permitted to be given or delivered to
holders of record of outstanding Warrant Shares shall be delivered at, or sent
by certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the office of
the Company at 9677 Tradeport Drive, Orlando, Florida 32827, or such other
address within the United States of America as shall have been furnished by the
Company to the Warrantholders and the holders of record of Warrant Shares. Any
notice or other document sent by certified or registered mail, return receipt
requested, shall be deemed to have been delivered and received when sent if the
receipt is appropriately completed and returned. Notices or documents delivered
in any other manner than as set forth above shall be deemed to have been
delivered only when and if received.
ARTICLE 8
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
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<PAGE> 8
ARTICLE 9
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
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<PAGE> 9
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 12th day of November, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
-------------------------------------------
Robert Shaw
President and Chief Executive Officer
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<PAGE> 10
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
-------------------------------
Signature Guaranteed:
Dated:
------------------------
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EXHIBIT 4.9
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS.
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED AND THE
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT CANNOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE WARRANT OR
STOCK UNDER SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
WARRANT
TO PURCHASE COMMON STOCK OR PURCHASE SERIES B CONVERTIBLE PREFERRED
STOCK, AS SET FORTH BELOW, OF
WORLD COMMERCE ONLINE, INC., A DELAWARE CORPORATION
EXPIRING AT THE END OF THE OPTION PERIOD (DEFINED BELOW)
This Is To Certify That Interprise Technology Partners, L.P.
("INTERPRISE" or the "HOLDER") or registered assigns, is entitled to purchase
from World Commerce Online, Inc., a Delaware corporation (the "Company"), at any
time until 5 P.M. Eastern Time, on October 31, 2004 (the "OPTION PERIOD") but
not thereafter, at an exercise price per share as set forth below, 110,000 fully
paid and non-assessable shares of Series B Convertible Preferred Stock, par
value $.001, with the rights and privileges as set forth in Exhibit A attached
hereto ("SERIES B PREFERRED STOCK") (the shares issuable pursuant to this
warrant are referred to as "WARRANT SHARES"), as set forth below, subject to
adjustment as hereinafter provided.
ss.1. EXERCISE OF WARRAnt.
(a) EXERCISE BY PAYMENT. To exercise this Warrant in whole or in part,
the holder hereof shall deliver to the Company at its principal office in
Orlando, Florida, (a) a written notice, in substantially the form of the
Subscription Notice appearing at the end of this Warrant, of such holder's
election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, (b) a certified check drawn on, or official bank
check, payable to the Company in an amount equal to the multiple of the Exercise
<PAGE> 2
Price (as adjusted) and the number of Warrant Shares being purchased, and (c)
this Warrant. The Company shall as promptly as practicable, and in any event
within 20 days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates
representing the aggregate number of Warrant Shares specified in such notice.
The stock certificate or certificates so delivered shall be in the denomination
of 100 shares each or such lesser or greater denomination as may be specified in
such notice and shall be issued in the name of such holder or such other name as
shall be designated in such notice. Such certificate or certificates shall be
deemed to have been issued and such holder or any other person so designated to
be named therein shall be deemed for all purposes to have become a holder of
record of such Warrant Shares as of the date such notice is received by the
Company as aforesaid. If this Warrant shall have been exercised only in part,
the Company shall, at the time of delivery of said certificate or certificates,
deliver to such holder a new Warrant evidencing the rights of such holder to
purchase the remaining shares of Common Stock called for by this Warrant, which
new Warrant shall in all other respects be identical to this Warrant, or, at the
request of such holder, appropriate notation may be made on this Warrant and the
same returned to such holder. The Company shall pay all expenses, taxes and
other charges payable in connection with the preparation, issue and delivery of
such stock certificates and new Warrants, except that, in case such stock
certificates or new Warrants shall be registered in a name or names other than
the name of the holder of this Warrant, funds sufficient to pay all stock
transfer taxes that are payable upon the issuance of such stock certificate or
certificates or new Warrants shall be paid by the holder hereof at the time of
delivering the notice of exercise mentioned above.
(b) EXERCISE ON NET ISSUANCE BASIS. At any time, in lieu of payment to
the Company as set forth in SECTION 1(A) above, the holder hereof may convert
this Warrant, in whole or in part, into the number of shares of stock determined
by dividing (i) the aggregate Fair Market Value of the shares of Common Stock
issuable upon the proposed exercise of this Warrant (on an as converted basis)
minus the aggregate Exercise Price of such the proposed exercise of this Warrant
by (ii) the Fair Market Value of one share of Common Stock. "FAIR MARKET Value"
shall mean the average of the closing prices of the Common Stock reported for
the five business days immediately before the holder hereof delivers its Notice
of Exercise to the Company, or if there have been no sales on any such business
day, the average of the highest bid and lowest asked prices at the end of such
business day.
(c) VALID ISSUANCE. All shares of stock issued upon the exercise of
this Warrant shall be validly issued, fully paid and nonassessable and, if the
class or series of Warrant Shares is then listed on a national securities
exchange, shall be duly listed thereon.
(d) EXERCISE PRICE. The exercise price per Warrant Share (the "EXERCISE
PRICE") shall be $4.00 (Four U.S. Dollars), subject to adjustment as set forth
in Section 7 below.
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(e) FRACTIONAL SHARES. The Company shall not be required upon any
exercise of this Warrant to issue a certificate representing any fraction of a
Warrant Share, but, in lieu thereof, shall pay to the holder of this Warrant
cash in an amount equal to a corresponding fraction (calculated to the nearest
1/100 of a share) of the market value of one Warrant Share as of the date of
receipt by the Company of notice of exercise of this Warrant, as determined in
good faith by the Board of Directors of the Company.
ss.2. TRANSFER, DIVISION AND COMBINATIon.
The Company agrees to maintain at its principal office in Orlando,
Florida, books for the registration and transfer of the Warrants, and this
Warrant and all rights hereunder are transferable, in whole or in parts, on such
books at such office, upon surrender of this Warrant at such office, together
with a written assignment of this Warrant duly executed by the holder hereof or
his agent or attorney and funds sufficient to pay any stock transfer taxes
payable upon the making of such transfer. Upon such surrender and payment the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. If and when this
Warrant is assigned in blank, the Company may (but shall not be obliged to)
treat the bearer hereof as the absolute owner of this Warrant for all purposes
and the Company shall not be affected by any notice to the contrary. A Warrant
may be exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
This Warrant may be divided or combined with other Warrants upon
presentation hereof at such principal office in Orlando, Florida, together with
a written notice specifying the names and denominations in which new Warrants
are to be issued, signed by the holder hereof or his agent or attorney. Subject
to compliance with the preceding paragraph as to any transfer that may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
The Company shall pay all expenses, taxes (other than stock transfer
taxes) and other charges payable in connection with the preparation, issue and
delivery of Warrants hereunder.
ss.3. CERTAIN COVENANts.
The Company covenants and agrees that:
(a) it will at all times maintain and reserve, free from
pre-emptive rights, such number of shares of authorized but unissued
Series B Preferred Stock, with the rights and privileges as set forth
in Exhibit A attached hereto, so that this Warrant may be exercised
without additional authorization of Series B Preferred Stock after
giving effect to all other options, warrants, convertible securities
and other rights to acquire shares of the Company.
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(b) it will at all times reserve and set apart and have, free
from preemptive rights, a number of shares of authorized but unissued
Common Stock sufficient to enable it at any time to fulfill all its
obligations hereunder;
(c) before taking any action that would cause an adjustment
reducing the Exercise Price below the then par value of the shares of
Common Stock issuable upon exercise of the Warrants, the Company will
take any corporate action that may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable
shares of such Common Stock at such adjusted Exercise Price; and
(d) it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by the Company.
ss.4. NOTICes.
In case the Company proposes
(a) to pay any dividend payable in stock (of any class or
classes) or in Convertible Securities upon its Series B Preferred Stock
or Common Stock or make any distribution (other than ordinary cash
dividends) to the holders of its Series B Preferred Stock or Common
Stock, or
(b) to grant to the holders of its Series B Preferred Stock or
Common Stock generally any rights or options, or
(c) to effect any capital reorganization or reclassification
of capital stock of the Company, or
(d) to consolidate with, or merge into, any other corporation
or to transfer its property as an entirety or substantially as an
entirety, or
(e) to effect the liquidation, dissolution or winding up of
the Company,
then the Company shall cause notice of any such intended action to be given to
all holders of record of outstanding Warrants not less than 30 days before the
date on which the transfer books of the Company shall close or a record be taken
for such stock dividend, distribution or granting of rights or options, or the
date when such capital reorganization, reclassification, consolidation, merger,
transfer, liquidation, dissolution or winding up shall be effective, as the case
may be.
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Any notice or other document required or permitted to be given or
delivered to holders of record of Warrants shall be mailed first-class postage
prepaid to each such holder at the last address shown on the books of the
Company maintained for the registry and transfer of the Warrants. Any notice or
other document required or permitted to be given or delivered to holders of
record of Common Stock issued pursuant to Warrants shall be mailed first-class
postage prepaid to each such holder at such holder's address as the same appears
on the stock records of the Company. Any notice or other document required or
permitted to be given or delivered to the Company shall be mailed first class
postage prepaid to the principal office of the Company, at
______________________, Orlando, Florida _______, or delivered to the office of
one of the Company's executive officers at such address, or such other address
within the United States of America as shall have been furnished by the Company
to the holders of record of such Warrants and the holders of record of such
Common Stock.
ss.5. LIMITATION OF LIABILITY; NOT STOCKHOLDERS; RIGHTS OF THE
HOLDER.
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote or to consent or to receive dividends or to
receive notice as a stockholder in respect of meetings of stockholders for the
election of directors of the Company or any other matter whatsoever as
stockholders of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the purchase price or as a stockholder of the
Company, whether such liability is asserted by the Company, creditors of the
Company or others.
Without limiting the foregoing or any remedies available to the holder
hereof, the holder will be entitled to specific performance of the obligations
hereunder, and injunctive relief against actual or threatened violations of the
obligations of any person subject to, this Warrant.
Upon exercise of this Warrant, the holders of the Warrant Shares shall
have and be entitled to exercise, together with all other holders of Registrable
Securities possessing Registration Rights under the Registration Rights
Agreement dated as of March 30, 1999 and all successor agreements (the "RRA"),
the rights of registration granted under the RRA to Registrable Securities (with
respect to the shares issued upon exercise of this Warrant).
ss.6. LOSS, DESTRUCTION, ETC, OF WARRANts.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, mutilation or destruction of any Warrant, and in the case of any
such loss, theft or destruction upon delivery of a bond of indemnity in such
form and amount as shall be reasonably satisfactory to the Company, or in the
event of such mutilation upon surrender
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<PAGE> 6
and cancellation of the Warrant, the Company will make and deliver a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant. Any Warrant issued under the provisions of this Section 6 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or of any mutilated
Warrant, shall constitute an original contractual obligation on the part of the
Company.
ss.7. ADJUSTMENT.
The number of Warrant Shares and the Exercise Price shall be subject to
adjustment from time to time or upon exercise as provided in this Section 7.
(a) SPLIT, SUBDIVISION OR CONSOLIDATION OF SHARES. If the Company shall
split, subdivide or combine the securities as to which purchase rights exist
under this Warrant, into a different number of securities of the same class, the
number of Warrant Shares after such consolidation or subdivision will be
increased or reduced, as the case may be, such increase or decrease, as the case
may be, to become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective,
and in each case, the Exercise Price shall be adjusted accordingly. The holder
hereof will not be entitled to receive a fraction of a share of stock.
(b) STOCK DIVIDENDS. In the event that the holders of the securities as
to which purchase rights under this Warrant exist shall have received or become
entitled to receive, without payment therefor, other or additional stock or
securities or property (other than cash) of the Company by way of dividend, then
in each case, the this Warrant shall represent the right to acquire, in addition
to the number of Warrant Shares indicated in the caption of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other securities or property (other than cash) of the Company to which the
holder hereof would have been entitled had this Warrant been exercised prior to
the distribution of the dividend and had thereafter such holder retained such
shares and/or all other additional stock available to it during the period prior
to the exercise of this Warrant, giving effect to all adjustments called for in
this Section 7, and in each case, the Exercise Price shall be adjusted
accordingly.
(c) MERGER OR REORGANIZATION, ETC. If at any time while this Warrant,
or any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into the property, whether in the form of securities, cash, or otherwise,
or (iii) a sale or transfer of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Warrant shall thereafter
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<PAGE> 7
be entitled to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Exercise Price then in effect, the
number of shares or other securities or property of the successor corporation
resulting from such reorganization, merger, consolidation, sale or transfer that
a holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Section. If the per-share consideration payable
to the holder hereof for shares in connection with any such transaction is in a
form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors.
(d) ADJUSTMENT OF NUMBER OF WARRANT SHARES UPON ISSUANCE OF ADDITIONAL
SHARES OF COMMON. In the event that prior to the exercise of this Warrant, the
Company shall issue Additional Shares of Common (as defined below) (including
Additional Shares of Common deemed to be issued pursuant to SECTION 7(E))
without consideration or for a consideration per share less than the Exercise
Price in effect on the date of and immediately prior to such issue, then and in
such event, the holder shall, upon the exercise or conversion of this Warrant,
be entitled to receive, without payment of any additional consideration
therefor, the increased number of Warrant Shares equal to $440,000 divided by
the product of the existing Exercise Price (as adjusted) and a fraction (i) the
numerator of which is the sum of (A) the total number of shares of Common Stock
issued and outstanding (on an as converted basis) plus (B) the number of
Additional Shares of Common Shares that can be purchased at the existing
Exercise Price for the total consideration received or deemed to be received for
the issuance or deemed issuance of Additional Shares of Common and (ii) the
denominator of which is the Common Stock issued and outstanding (on an as
converted basis) plus the number of Additional Shares of Common issued or deemed
to be issued in the new issuance or deemed issuance.
(e) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON --
OPTIONS AND CONVERTIBLE SECURITIES. In the event that prior to the exercise of
this Warrant, the Company shall issue any Options or Convertible Securities (as
those terms are defined below) (other than Options or Convertible Securities
which are not Additional Shares of Common) or shall fix a record date for the
determination of holders of any class or series of securities entitled to
receive any such Options or Convertible Securities, then the shares of Common
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common issued as of the
time of such issue or, in case such a record date shall have been fixed, as of
the close of business on such record date; provided, that in any such case in
which Additional Shares of Common are deemed to be issued:
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<PAGE> 8
(i) no further adjustment in the number of shares shall be
made upon the subsequent issue of Convertible Securities or shares of Common
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;
(ii) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decreases in the number of shares of
Common issuable, upon the exercise, conversion or exchange thereof, the number
of shares computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, PROVIDED that no shares of Common have theretofore been issued with
respect to such Options or Convertible Securities, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities;
(iii) no readjustment pursuant to clause (ii) above shall have
the effect of decreasing the number of shares to an amount which is less than
the greater of (1) such number on the original adjustment date with respect to
such deemed issuance of Additional Shares of Common, or (2) such number that
would have resulted from any issuance of Additional Shares of Common between
such original adjustment date and such readjustment date; and
(iv) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any decrease in the
consideration payable to the Company upon the exercise, conversion or exchange
thereof, the number computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such decrease becoming effective, be
recomputed to reflect such decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities.
(f) SPECIAL DEFINITIONS. For purposes of SECTIONS 7(D) THROUGH (I), the
following definitions shall apply:
(i) "OPTION" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(ii) "COMMON" shall mean (i) the Company's presently
authorized Common Stock as such class exists on the date of issuance of this
Warrant, and (ii) stock of the Company of any class or series thereafter
authorized that ranks, or is entitled to a participation, as to assets or
dividends, substantially on a parity with Common Stock.
(iii) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common.
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<PAGE> 9
(iv) "ADDITIONAL SHARES OF COMMON" shall mean all shares of
Common issued (or, pursuant to SECTION 7(E), deemed to be issued) by the Company
after the date hereof and prior to the exercise of this Warrant, other than:
(A) options issued at an exercise price per share no
less than $1.80 (as adjusted for stock splits, consolidations or stock
dividends) to officers, employees or directors of the Company under any stock
option plan adopted by the Board of Directors of the Company; PROVIDED, HOWEVER,
that any shares covered by such options or rights plus any such shares issued
(without duplication as to shares issued under options) in excess of 2,277,750
shares of Common Stock as constituted on the date of issuance of this Warrant
(as adjusted for stock splits, consolidations or stock dividends) shall be
deemed to be Additional Shares of Common;
(B) shares issued as a dividend or distribution on
Common Stock or any event for which adjustment is made pursuant to SECTIONS 7(A)
AND (B) hereof;
(C) shares issued upon conversion of Convertible
Securities; or
(D) shares issued by way of dividend or other
distribution on (1) shares excluded from the definition of Additional Shares of
Common by the foregoing clauses (A) through (C) or (2) shares of Common so
excluded under this clause (D).
(g) NO ADJUSTMENT OF NUMBER OF WARRANT SHARES OR EXERCISE PRICE. No
adjustment in the number of Warrant Shares or Exercise Price shall be made in
respect of the issuance of Additional Shares of Common unless the consideration
per share for an Additional Share of Common issued or deemed to be issued by the
Company is less than the Exercise Price in effect on the date of, and
immediately prior to, the issue of such Additional Share of Common.
(h) EFFECT OF "SPLIT-UP OR "SPLIT-DOWN" ON "DEEMED ISSUED" SHARES. Upon
the effective or record date for any subdivision or combination of the Common
Stock of the character described in SECTION 7(A), including the issuance of a
stock dividend which is treated as such a subdivision under SECTION 7(B), the
number of the shares of Common Stock which are at the time deemed to have been
issued by virtue of SECTION 7(E), but have not actually been issued, shall be
deemed to be increased or decreased proportionately.
(i) COMPUTATION OF CONSIDERATION. For the purposes of this SECTION 7:
(i) The consideration received by the Company upon the actual
issuance of Additional Shares of Common shall be deemed to be the sum of the
amount of cash and the fair value of property (as determined in good faith by
resolution of the Board of Directors of the Company as at the time of issue or
"deemed issue" in the case of the following paragraph (ii)) received or
receivable by the Company as the consideration or part of the consideration (v)
at the time of issuance of the Common, (w)
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<PAGE> 10
for the issuance of any rights or options upon the exercise of which such Common
was issued, (x) for the issuance of any rights or options to purchase
Convertible Securities upon the conversion of which such Common was issued, (y)
for the issuance of the Convertible Securities upon conversion of which such
Common was issued, and (z) at the time of the actual exercise of such rights,
options or conversion privileges upon the exercise of which such Common was
issued, in each case without deduction for commissions and expenses incurred by
the Company for any underwriting of, or otherwise in connection with the issue
or sale of, such rights, options, Convertible Securities or Common, but after
deduction of any sums paid by the Company in cash upon the exercise of, and
pursuant to, such rights, options or conversion privileges in respect of
fractional shares of Common; and
(ii) The consideration deemed to have been received by the
Company for Additional Shares of Common deemed to be issued pursuant to rights,
options and conversion privileges by reason of transactions of the character
described in SECTION 7(E) shall be the consideration (determined as provided in
the foregoing paragraph (i)) that would be received or receivable by the Company
at or before the actual issue of such shares of Common so deemed to be issued,
if all rights, options and conversion privileges necessary to effect the actual
issue of the number of shares deemed to have been issued had been exercised
(successively exercised in the case of rights or options to purchase Convertible
Securities), and the minimum consideration received or receivable by the Company
upon such exercise had been received; all computed without regard to the
possible future effect of anti-dilution provisions on such rights, options
and/or conversion privileges.
(j) STATEMENT OF ADJUSTMENT. Whenever the number of Warrant Shares is
adjusted pursuant to any of the foregoing provisions of this SECTION 7, the
Company shall promptly prepare a written statement signed by the President of
the Company, setting forth the adjustment, determined as provided in this
Section, and in reasonable detail the facts requiring such adjustment and the
calculation thereof. Such statement shall be filed among the permanent records
of the Company and a copy thereof shall be furnished to the holder of this
Warrant without request and shall at all reasonable times during business hours
be open to inspection by holders of the Warrants.
(k) DETERMINATION BY THE BOARD OF DIRECTORS. All determinations by the
Board of Directors of the Company under the provisions of this SECTION 7 shall
be made in good faith.
(l) CONVERSION OF SERIES B PREFERRED STOCK. Should all of the Company's
Series B Preferred Stock be, or if outstanding would be, at any time prior to
the expiration of this Warrant or any portion thereof, redeemed or converted
into shares of the Company's Common Stock in accordance with the Company's
Certificate of Incorporation, then this Warrant shall become immediately
exercisable for that number of shares of the Company's Common Stock equal to the
number of shares of the Common Stock that would have been received if this
Warrant had been exercised in full and the
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<PAGE> 11
Series B Preferred Stock received thereupon had been simultaneously converted
immediately prior to such event, and the Exercise Price shall immediately be
adjusted to equal the quotient obtained by dividing (x) the aggregate Exercise
Price of the maximum number of shares of Series B Preferred Stock for which this
Warrant was exercisable immediately prior to such conversion or redemption, by
(y) the number of shares of Common Stock for which this Warrant is exercisable
immediately after such conversion or redemption.
ss.8. GOVERNING Law.
This Warrant shall be governed by the laws of the State of Delaware,
without giving effect to the rules respecting conflict of law.
ss.9. ENTIRE AGREEMENT; MODIFICATION; WAIVer. This Warrant constitutes
the entire agreement between the parties pertaining to the subject matter
herein, and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this Warrant shall be binding unless executed in writing by the
parties hereto. No waiver of any of the provisions of this Warrant shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by a duly authorized officer.
Dated: October 15, 1999
World Commerce Online, Inc.
By /s/ Robert Shaw
-----------------------
Robert Shaw, CEO
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<PAGE> 12
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by such Warrant for, and to purchase
thereunder, __________ shares of the ____________________ Stock covered by such
Warrant and herewith makes payment in full therefor of $__________ cash, and
requests that certificates for such shares (and any securities or property
deliverable upon such exercise) be issued in the name of and delivered to
__________________________ whose address is
__________________________________________.
--------------------------------
Dated:
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<PAGE> 13
SUBSCRIPTION NOTICE FOR EXERCISE ON NET ISSUANCE BASIS
The undersigned, the holder of the foregoing Warrant, hereby elects to
convert this Warrant, as to _____________ shares of ______________ Stock covered
hereby, into _________ shares of _________________ Stock, and requests that
certificates for such shares (and any securities or property deliverable upon
such exercise) be issued in the name of and delivered to _____________________
whose address is ______________________________.
---------------------------------
Dated:
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<PAGE> 14
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________ the rights represented by the foregoing
Warrant of ____________________ and appoints __________________________ attorney
to transfer said rights on the books of said corporation, with full power of
substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatever.
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<PAGE> 1
EXHIBIT 4.10
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, TUCKER H. BYRD (together
with his successors and permitted assigns, "Holder"), is granted the right to
purchase, subject to the provisions in the next sentence, from World Commerce
Online, Inc., a Delaware corporation (the "Company"), 30,000 duly authorized,
validly issued, fully paid and nonassessable shares of common stock, par value
$.001 per share, of the Company ("Common Stock"), at the Current Warrant Price
(as hereinafter defined) in lawful money of the United States of America. Holder
is entitled to purchase 30,000 shares of Common Stock at any time and from time
to time prior to 5 P.M. local time at the place where the Warrant Office
hereinafter referred to is located on or before October 17, 2009. The purchase
price hereunder at any time of a single share of Common Stock is referred to
herein as the "Current Warrant Price." Initially, and until adjustment in the
manner hereinafter provided, the Current Warrant Price with respect to such
30,000 shares shall be $8.00 per share. The number of shares of Common Stock
purchasable hereunder and the Current Warrant Price are subject to adjustment
from time to time in the manner provided in Article 4 below. Certain terms in
this Warrant are defined in Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, Holder shall deliver to the
Company at the Warrant Office designated pursuant to Section 2.1: (i) a written
notice, in substantially the form of the Subscription Notice appearing at the
end of this Warrant, of such Holder's election to exercise this Warrant, which
notice shall specify the number of shares of Common Stock to be purchased and
the nature of payment (ii) a certified or official bank check payable to the
order of the Company (or any other form of consideration which the Company and
the holder hereof may have agreed to accept in payment of the Current Warrant
Price) in the aggregate equal to the aggregate Current Warrant Price of the
number of shares of Common Stock being purchased; and (iii) this Warrant. The
Company shall as promptly as practicable, and in any event within 10
<PAGE> 2
days after receipt by the Company of such notice, execute and deliver or cause
to be executed and delivered, in accordance with said notice, a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in said notice. The stock certificate or certificates so delivered
shall be in the denomination as may be specified in said notice and shall be
issued in the name of such holder or such other name as shall be designated in
said notice. Such certificate or certificates shall be deemed to have been
issued and such holder or any other person so designated to be named therein
shall be deemed for all purposes to have become a holder of record of such
shares as of the date the consideration specified for such shares is received by
the Company as aforesaid. If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc. that such registration is not required."
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<PAGE> 3
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof as shall be reasonably acceptable to the Company,
the securities represented thereby need no longer be subject to the restrictions
contained in Article 3 below. The provisions of Article 3 below shall be binding
upon all subsequent holders of this Warrant.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Article 2.
SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books
at the Warrant Office for the registration and transfer of this Warrant, and,
subject to the provisions of Article 3 below, this Warrant and all rights
hereunder are transferable, in whole or in part, on said books at said office,
upon surrender of this Warrant at said office, together with a written
assignment of this Warrant duly executed by the holder hereof or his duly
authorized agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment, and this Warrant shall promptly be canceled. A Warrant may be
exercised by a new holder for the purchase of shares of Common Stock without
having a new Warrant issued. No holder of this Warrant may divide this or any
other Warrant into a Warrant exercisable into less than 10,000 shares of Common
Stock.
SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay
all expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of this Warrant or any
new Warrant hereunder.
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ARTICLE 3
RESTRICTIONS ON EXERCISE
AND TRANSFER; REGISTRATION RIGHTS
SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The holder of this
Warrant, as of the date of issuance hereof, represents to the Company that it is
not acquiring the Warrant with a view to the distribution thereof.
Notwithstanding any provisions contained in this Warrant to the contrary, this
Warrant and the related Warrant Shares shall not be transferable except pursuant
to the proviso contained in the following sentence or upon the conditions
specified in this Article 3, which conditions are intended, among other things,
to insure compliance with the provisions of the Act and applicable state law in
respect of the transfer of this Warrant or such Warrant Shares. The holder of
this Warrant, by its acceptance hereof, agrees that it will not transfer this
Warrant or the related Warrant Shares prior to delivery to the Company of an
opinion of such holder's counsel reasonably satisfactory to the Company (as such
opinion and such counsel are described in Section 3.2 below) or until
registration of such Warrant Shares under the Act has become effective or after
a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule
144 or Rule 144A under the Act.
SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The
holder of this Warrant, by its acceptance hereof, agrees that prior to any
transfer of this Warrant or of the related Warrant Shares (other than pursuant
to a registration under the Act), such holder will give written notice to the
Company of its intention to effect such transfer, together with an opinion of
counsel for such holder as shall be reasonably acceptable to the Company, to the
effect that the proposed transfer of this Warrant and/or such Warrant Shares may
be effected without registration under the Act or applicable state law. Upon
delivery of such notice and opinion to the Company, the holder of this Warrant
or such Warrant Shares shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice delivered by such holder to the Company; PROVIDED, HOWEVER, that
if such method of disposition would, in the opinion of such counsel, require
that the Company take any reasonable action and/or execute and file with the
Commission and/or any state securities authority with jurisdiction and/or
deliver to the Warrantholder or any other person any form or document (other
than a registration statement under the Act or under any state securities laws
or any information requirements pursuant to Regulation D) in order to establish
the entitlement of the holder of this Warrant to take advantage of such method
of disposition, the Company agrees, at its expense, to take any such reasonable
action and/or execute and file and/or deliver any such form or document.
SECTION 3.3. "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to the expiration of the
Warrants, proposes to register any of its equity securities (as defined in the
Act), other than securities which are convertible into shares of Common Stock,
under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)
or on any other form upon which may be registered securities similar to the
Warrant Shares, it will at each such time give written notice at least 30 days
prior to the filing of the registration statement to all Warrantholders of its
intention so to do. Such
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<PAGE> 5
notice shall specify the proposed date of the filing of the registration
statement and advise each Warrantholder of its right to participate therein.
Upon the written request of any Warrantholder given prior to the proposed date
of filing set forth in such notice, the Company will cause each Warrant Share
which the Company has been requested to register by such Warrantholder to be
registered under the Act, all to the extent requisite to permit the sale or
other disposition by such Warrantholder of the Warrant Shares so registered.
(b) If, in the written opinion of the underwriter or
underwriters managing the public offering which is the subject of a registration
pursuant to Section 3.3(a) above (or in the event that such distribution shall
not be underwritten, in the written opinion of an investment banking firm of
recognized standing satisfactory to the Warrantholders), the total amount of the
securities to be so registered, when added to the total amount of Warrant Shares
which the Warrantholders have requested to be registered pursuant to Section
3.3(a) above, will exceed the maximum amount of securities of the Company which
can be marketed: (i) at a price reasonably related to their then current market
value; or (ii) without otherwise materially and adversely affecting the entire
offering, then the Company shall have the right to exclude from such
registration such number of Warrant Shares which it would otherwise be required
to register pursuant to Section 3.3(a) above as is necessary to reduce the total
amount of securities to be so registered to the maximum amount of securities
which can be so marketed; PROVIDED, HOWEVER, that if the securities (other than
the Warrant Shares) to be so registered for sale are to be offered for the
account of the Company and others, the Company may only cut back Warrant Shares
pro rata with the securities held by such other persons (it being agreed that in
the case where such registration is to be effected as a result of the exercise
by a holder of the Company's securities of such holder's right to cause such
securities to be so registered, such pro rata cut back shall include the
Company).
SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the
Company is obligated by the provisions of this Article 3 to effect the
registration of any Warrant Shares under the Act, as expeditiously as possible
the Company will:
(a) as expeditiously prepare and file with the Commission a
registration statement with respect to such Warrant Shares and use its best
efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the securities covered by the
registration statement; PROVIDED, HOWEVER, that in the event that the Warrant
Shares covered by such registration statement are not to be sold to or through
underwriters acting for the Company, the Company shall not be required to keep
such registration statement in effect, or to prepare and file any amendments or
supplements thereto, after the expiration of six months following the date on
which such registration statement becomes effective under the Act or such longer
period during which the Commission requires that such registration statement be
kept effective with respect to any of the Warrant Shares so registered;
(b) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to
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<PAGE> 6
comply with the provisions of the Act with respect to the disposition of all
Warrant Shares covered by such registration statement, whenever the
Warrantholders for whom such Warrant Shares are registered or are to be
registered shall desire to dispose of the same, subject, however to the proviso
contained in Section 3.4(a) above; PROVIDED, HOWEVER, that in any event the
Company's obligations under this Section 3.4(b) shall terminate 90 days after
the effective date of any such registration statement if none of the Warrant
Shares registered thereunder shall have been sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares;
SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses
of all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Article 3 shall be paid for by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.6. INFORMATION FROM WARRANTHOLDERS. Notices and requests
delivered by Warrantholders to the Company pursuant to this Article 3 shall
contain such information regarding the Warrant Shares and the intended method of
disposition thereof as shall reasonably be required in connection with the
action to be taken.
SECTION 3.7. COMPANY'S INDEMNIFICATION. In the event of any
registration under the Act of any Warrant Shares pursuant to this Article 3, the
Company hereby agrees to indemnify and hold harmless each Warrantholder
disposing of such Warrant Shares and each other person, if any, who controls
such Warrantholder within the meaning of Section 15 of the Act and each other
person (including underwriters) who participates in the offering of such Warrant
Shares against any losses, claims, damages or liabilities, joint or several, to
which such Warrantholder or controlling person or participating person may
become subject under the Act or otherwise, in so far as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained,
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<PAGE> 7
on the effective date thereof, in any registration statement under which such
Warrant Shares were registered under the Act, in any preliminary prospectus or
final prospectus contained therein, or in any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such Warrantholder and
each such controlling person or participating person for any legal or any other
expenses incurred by such Warrantholder or such controlling person or
participating person in connection with investigating or defending any such
loss, claim, damage, liability or proceeding; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon: (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Warrantholder or such controlling
or participating person, as the case may be, specifically for use in the
preparation thereof; or (b) an untrue statement or alleged untrue statement,
omission or alleged omission in a prospectus if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the prospectus which amendment or supplement is delivered to such
Warrantholder and such Warrantholder thereafter fails to deliver such prospectus
as so amended or supplemented prior to or concurrently with the sale of Warrant
Shares to the person asserting such loss, claim, damage, liability or expense.
SECTION 3.8. WARRANTHOLDER'S INDEMNIFICATIONS. If the Company so
requests, each Warrantholder for whom Warrant Shares are to be so registered
shall execute an agreement or agreements, whereby such Warrantholder agrees to
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of Section 15 of the Act in respect
of such registration statement and each other person, if any, which controls the
Company within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such other person or such
person controlling the Company may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceeding in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such Warrant Shares were registered under the
Act, in any preliminary prospectus or final prospectus contained therein or in
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
which, in each such case, has been made in or omitted from such registration
statement, said preliminary or final prospectus or said amendment or supplement
in reliance upon, and in conformity with, information furnished to the Company
by such Warrantholder specifically for use in the preparation thereof. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information with respect to such persons so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
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SECTION 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification; and (b) unless, in such indemnified party's reasonable
judgment, a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided, HOWEVER, that the failure of an indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Section 3.9 with respect to such indemnified party,
except to the extent that the indemnifying party is actually prejudiced by such
failure. Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
Sections 3.7 and 3.8 above is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.10. PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either: (i) there will be available adequate current public information with
respect to the Company as required by said Rules; or (ii) if such information is
not available the Company will use its best efforts to make such information
available without delay.
ARTICLE 4
ANTI-DILUTION PROVISIONS
SECTION 4.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
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<PAGE> 9
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 4.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.3. EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby the holder of this Warrant shall
thereafter be entitled to purchase pursuant to this Warrant (in lieu of the
number of shares of Common Stock which such holder would have been entitled to
purchase immediately prior to such consolidation, merger, sale or conveyance)
the shares of stock or other securities or property to which such number of
shares of Common Stock would have been entitled at the time of such
consolidation, merger, sale or conveyance, at an aggregate purchase price equal
to that which would have been payable if such number of shares of Common Stock
had been purchased by exercise of this Warrant immediately prior thereto. In
case of any such consolidation, merger, sale or conveyance, an appropriate
provision shall be made with respect to the rights and interests thereafter of
any holder of this Warrant, to the end that all the provisions of this Warrant
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of this Warrant. The Company shall not effect any
such consolidation, merger, sale or conveyance unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger or purchasing such assets
shall assume by written instrument, executed and mailed or delivered to the
holder of this Warrant, the obligation to deliver to such holder such shares of
stock or other securities or
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<PAGE> 10
property as, in accordance with the foregoing provisions, such Warrantholder may
be entitled to receive, which instrument shall contain the express assumption by
such successor corporation of the due and punctual performance and observance of
every provision of this Warrant to be performed and observed by the Company and
of all liabilities and obligations of the Company hereunder.
SECTION 4.4. REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except as provided in Section 4.2 above) while this Warrant remains
outstanding, then, as a condition of such reorganization or reclassification,
lawful and adequate provision shall be made whereby the holder of this Warrant
shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of
the number of shares of Common Stock which such holder would have been entitled
to purchase immediately prior to such reorganization or reclassification) the
shares of stock of any class or classes or other securities or property to which
such number of shares of Common Stock would have been entitled at the time of
such reorganization or reclassification, at an aggregate purchase price equal to
that which would have been payable if such number of shares of Common Stock had
been purchased immediately prior to such reorganization or reclassification. In
case of any such capital reorganization or reclassification, appropriate
provision shall be made with respect to the rights and interests thereafter of
the holders of Warrants, to the end that all the provisions of the Warrants
(including the provisions of this Article 4) shall thereafter be applicable, as
nearly as practicable, to such stock or other securities or property thereafter
deliverable upon the exercise of the Warrants.
SECTION 4.5. STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the holder of this
Warrant by reason of other events herein set forth, then and in each such case
the Company will promptly prepare a schedule setting forth the adjusted Current
Warrant Price and the adjusted number of shares purchasable hereunder, or
specifying the other shares of stock, other securities or property and the
amount thereof receivable as a result of such change in rights, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
schedule to the registered holder of this Warrant.
SECTION 4.6. NOTIFICATIONS BY THE COMPANY. In case at any time the
Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes);
(b) to effect any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(c) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more such cases,
the Company shall give written notice to the registered holder of this Warrant
of the date on which: (i) the transfer books of the Company
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<PAGE> 11
shall close or a record date shall be taken for such dividend; (ii) a record
date shall be taken to determine stockholders entitled to notice of and to vote
at any meeting of stockholders at which any such proposed reorganization,
reclassification, consolidation, merger, sale of assets, dissolution,
liquidation or winding-up is to be considered; or (iii) such reorganization,
reclassification, consolidation, merger, sale of assets, dissolution,
liquidation or winding-up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, or shall be entitled to vote on or exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale of assets,
dissolution, liquidation or winding-up, as the case may be. Such written notice
shall be given not less than 10 days prior to such date on which the transfer
books of the Company shall close or a record date shall be taken or any event
shall occur, as the case may be, and such notice may state that any such action
will be taken only if certain events specified in such notice (such as the
clearing of proxy material by the Commission or an affirmative vote of
stockholders) occur prior thereto.
ARTICLE 5
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially $8.00. The Current Warrant Price is subject to adjustment from time to
time pursuant to Article 4 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
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"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 4 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of the Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right initially to purchase an aggregate of 50,000 shares of Common Stock and
all warrants issued in substitution or subdivision hereof.
ARTICLE 6
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be
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issued upon exercise of this Warrant, the Company will, at its expense, as
expeditiously as possible, cause such shares to be duly registered or approved,
as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 7
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 8
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to,
such Holder at the last address shown on the books of the Company maintained at
the Warrant Office for the registration and registration of transfer of the
Warrants or at any more recent address of which any Warrantholder shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to holders of record of outstanding Warrant
Shares shall be delivered at, or sent by certified or registered mail to, each
such holder at such holder's address as the same appears on the stock records of
the Company. Any notice or other document required or permitted to be given or
delivered to the Company, other than such notice or documents required
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<PAGE> 14
to be delivered to the Warrant Office, shall be delivered at, or sent by
certified or registered mail to, the office of the Company at 9677 Tradeport
Drive, Orlando, Florida 32827, or such other address within the United States of
America as shall have been furnished by the Company to the Warrantholders and
the holders of record of Warrant Shares. Any notice or other document sent by
certified or registered mail, return receipt requested, shall be deemed to have
been delivered and received when sent if the receipt is appropriately completed
and returned. Notices or documents delivered in any other manner than as set
forth above shall be deemed to have been delivered only when and if received.
ARTICLE 9
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 10
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
ARTICLE 11
SUCCESSORS AND ASSIGNS
The rights and obligations of the parties hereunder shall be binding
upon and inure to the benefit of their respective successors and assigns.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 18th day of October, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
---------------------------------------
Robert Shaw
President and Chief Executive Officer
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SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
------------------------------------
Signature Guaranteed:
Dated:
----------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
------------------------------------
Signature Guaranteed:
Dated:
----------------------------
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EXHIBIT 4.11
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, ELIZABETH WALSH (together
with his successors and permitted assigns, "Holder"), is entitled to purchase
from World Commerce Online, Inc., a Delaware corporation (the "Company"), at any
time and from time to time beginning October 18, 1999, and ending at 5 P.M.
local time at the place where the Warrant Office hereinafter referred to is
located on or before October 18, 2004, 1,000 duly authorized, validly issued,
fully paid and nonassessable shares of common stock, par value $.001 per share,
of the Company ("Common Stock"), at the Current Warrant Price (as hereinafter
defined) in lawful money of the United States of America. The purchase price
hereunder at any time of a single share of Common Stock is referred to herein as
the "Current Warrant Price." Initially, and until adjustment in the manner
hereinafter provided, the Current Warrant Price with respect to such 1,000
shares shall be $8.00 per share. The number of shares of Common Stock
purchasable hereunder and the Current Warrant Price are subject to adjustment
from time to time in the manner provided in Article 4 below. Certain terms in
this Warrant are defined in Article 5 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, the Holder shall deliver to
the Company at the Warrant Office designated pursuant to Section 2.1: (i) a
written notice, in substantially the form of the Subscription Notice appearing
at the end of this Warrant, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased
and the nature of payment; (ii) a certified or official bank check payable to
the order of the Company (or any other form of consideration which the Company
and the holder hereof may have agreed to accept in payment of the Current
Warrant Price) in the aggregate equal to the aggregate Current Warrant Price of
the number of shares of Common Stock being purchased; and (iii) this Warrant.
The Company shall as promptly as practicable, and in any event within 10 days
after receipt by the Company of such notice, execute and deliver or cause to be
executed and delivered, in accordance with said notice, a certificate or
<PAGE> 2
certificates representing the aggregate number of shares of Common Stock
specified in said notice. The stock certificate or certificates so delivered
shall be in the denomination as may be specified in said notice and shall be
issued in the name of such holder or such other name as shall be designated in
said notice. Such certificate or certificates shall be deemed to have been
issued and such holder or any other person so designated to be named therein
shall be deemed for all purposes to have become a holder of record of such
shares as of the date the consideration specified for such shares is received by
the Company as aforesaid. If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc., that such registration is not required.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend.
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ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is initially registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of evidence satisfactory to the
Company that this Warrant has been transferred as provided in Section 2.3.
SECTION 2.3. TRANSFER OF WARRANT. This Warrant and all rights hereunder
may not be alienated, assigned, pledged or otherwise transferred, in whole or in
part, other than by Holder by will or the laws of descent and distribution, and
any attempt to make any such prohibited transfer shall be null and void.
ARTICLE 3
ANTI-DILUTION PROVISIONS
SECTION 3.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 3. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 3.2. EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
3
<PAGE> 4
ARTICLE 4
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time.
The Current Warrant Price is subject to adjustment from time to time pursuant to
Article 3 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 3 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
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<PAGE> 5
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right to purchase an aggregate of 100,000 shares of Common Stock and all
warrants issued in substitution or subdivision hereof.
ARTICLE 5
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 6
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
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<PAGE> 6
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 7
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to
Holder at the last address shown on the books of the Company maintained at the
Warrant Office for the registration of the Warrants or at any more recent
address of which Warrantholder shall have notified the Company in writing. Any
notice or other document required or permitted to be given or delivered to
holders of record of outstanding Warrant Shares shall be delivered at, or sent
by certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the office of
the Company at 9677 Tradeport Drive, Orlando, Florida 32827, or such other
address within the United States of America as shall have been furnished by the
Company to the Warrantholders and the holders of record of Warrant Shares. Any
notice or other document sent by certified or registered mail, return receipt
requested, shall be deemed to have been delivered and received when sent if the
receipt is appropriately completed and returned. Notices or documents delivered
in any other manner than as set forth above shall be deemed to have been
delivered only when and if received.
ARTICLE 8
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
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<PAGE> 7
ARTICLE 9
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 18th day of October, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
--------------------------------------
Robert Shaw
President and Chief Executive Officer
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<PAGE> 8
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _______________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
--------------------------
Signature Guaranteed:
Dated:
-----------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________ the rights represented by the foregoing Warrant of World
Commerce Online, Inc. and appoints ______________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises.
--------------------------
Signature Guaranteed:
Dated:
-----------------------
8
<PAGE> 1
EXHIBIT 4.12
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, NILS VAN BEEK, a citizen of
the Netherlands, (together with his permitted assigns, "Holder"), is hereby
granted, as of August 26, 1999 (the "Grant Date"), a warrant to purchase from
World Commerce Online, Inc., a Nevada corporation (the "Company"), up to 100,000
duly authorized, validly issued, fully paid and nonassessable shares (the
"Shares") of common stock, par value $.001 per share, of the Company ("Common
Stock"), at the Current Warrant Price (as hereinafter defined) in lawful money
of the United States of America, subject to the terms and conditions set forth
herein. The Warrant (as hereinafter defined) is exercisable in installments. To
the extent that the Warrant has become exercisable with respect to a percentage
of the Shares as provided below, the Warrant may thereafter be exercised by the
Holder, in whole or in part, at any time or from time to time prior to four
years after the Grant Date. The following table indicates each date (the
"Vesting Date") upon which the Holder shall be entitled to exercise the Warrant
with respect to the percentage of Shares granted as indicated beside the date,
provided that the Consulting Agreement between the Company and JOBO HOLDING
B.V., an entity organized under the laws of the Netherlands ("JOBO") entered
into as of August 26, 1999 (the "Consulting Agreement") is in full force and
effect and has not been terminated prior to any applicable Vesting Date:
PERCENTAGE OF SHARES VESTING DATE
-------------------- ------------
25% January 1, 2000
25% January 1, 2001
25% January 1, 2002
25% August 30, 2003
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in any period prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Upon termination
of the Consulting Agreement, any unvested portion of the Warrant shall terminate
and be null and void. Initially, and until adjustment in the manner hereinafter
provided, the Current Warrant Price with respect the Shares shall be the Current
<PAGE> 2
Market Price on the Grant Date. The number of shares of Common Stock purchasable
hereunder and the Current Warrant Price are subject to adjustment from time to
time in the manner provided in Article 3 below. Certain terms in this Warrant
are defined in Article 4 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, the Holder shall deliver to
the Company at the Warrant Office designated pursuant to Section 2.1: (i) a
written notice, in substantially the form of the Subscription Notice appearing
at the end of this Warrant, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased
and the nature of payment, whether by check or by this Warrant (pursuant to
Section 1.4) or by a combination thereof; (ii) a certified or official bank
check payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
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<PAGE> 3
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to the nearest 1/100 of a share) of the Current Market Price of one share of
Common Stock as of the date of receipt by the Company of notice of exercise of
this Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or otherwise transferred except pursuant to an
effective registration statement or the written opinion of counsel to World
Commerce Online, Inc., that such registration is not required.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is initially registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of evidence satisfactory to the
Company that this Warrant has been transferred as provided in Section 2.3.
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<PAGE> 4
SECTION 2.3. TRANSFER OF WARRANT. This Warrant and all rights hereunder
may not be alienated, assigned, pledged or otherwise transferred, in whole or in
part, other than by Holder by will or the laws of descent and distribution, and
any attempt to make any such prohibited transfer shall be null and void.
ARTICLE 3
ANTI-DILUTION PROVISIONS
SECTION 3.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Article 3. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 3.2. EFFECT OF "SPLIT -UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
ARTICLE 4
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
4
<PAGE> 5
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time.
The Current Warrant Price is subject to adjustment from time to time pursuant to
Article 3 above.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 3 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right to purchase an aggregate of 100,000 shares of Common Stock and all
warrants issued in substitution or subdivision hereof.
ARTICLE 5
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
5
<PAGE> 6
(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
(d) this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 6
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) this transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
6
<PAGE> 7
(c) the Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested to be inspected by
them.
ARTICLE 7
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to
Holder at the last address shown on the books of the Company maintained at the
Warrant Office for the registration of the Warrants or at any more recent
address of which Warrantholder shall have notified the Company in writing. Any
notice or other document required or permitted to be given or delivered to
holders of record of outstanding Warrant Shares shall be delivered at, or sent
by certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the office of
the Company at 9677 Tradeport Drive, Orlando, Florida 32827, or such other
address within the United States of America as shall have been furnished by the
Company to the Warrantholders and the holders of record of Warrant Shares. Any
notice or other document sent by certified or registered mail, return receipt
requested, shall be deemed to have been delivered and received when sent if the
receipt is appropriately completed and returned. Notices or documents delivered
in any other manner than as set forth above shall be deemed to have been
delivered only when and if received.
ARTICLE 8
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 9
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
7
<PAGE> 8
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 26th day of August, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ ROBERT SHAW
-------------------------------------------------
Robert Shaw
President and Chief Executive Officer
8
<PAGE> 9
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________________, whose address is
________________________________ and (2) if such shares shall not include all of
the shares issuable as provided in said Warrant, that a new Warrant of like
tenor and date for the balance of the shares issuable thereunder be delivered to
the undersigned.
---------------------------
Signature Guaranteed:
Dated:
--------------------------------
9
<PAGE> 1
EXHIBIT 4.13
THIS WARRANT AND THE COMMON STOCK OF WORLD COMMERCE ONLINE, INC., (THE
"COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS SUCH COMMON STOCK
IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO SALE, TRANSFER,
OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS, IN THE WRITTEN
OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT VIOLATE OR REQUIRE
REGISTRATION UNDER ANY SUCH STATUTE.
WARRANT
To Purchase Common Stock of
WORLD COMMERCE ONLINE, INC.
This is to certify that, for value received, Dole Fresh Flowers, Inc., a
Delaware corporation (together with its permitted assigns, "Holder"), is hereby
granted, as of December 10, 1999 (the "Grant Date"), a warrant to purchase from
World Commerce Online, Inc., a Delaware corporation (the "Company"), up to
1,000,000 duly authorized, validly issued, fully-paid and nonassessable shares
(the "Shares") of common stock, par value $.001 per share, of the Company
("Common Stock"), at $7.50 PER SHARE OR THE CURRENT WARRANT PRICE, WHICHEVER IS
LESS (as hereinafter defined) in lawful money of the United States of America,
subject to the terms and conditions set forth herein. The Warrant (as
hereinafter defined) shall vest and become exercisable in installments. To the
extent that the Warrant has vested and become exercisable with respect to a
number of Shares as provided below, the Warrant may thereafter be exercised by
the Holder, in whole or in part, at any time or from time to time prior to ten
(10) years after the Grant Date.
The following table indicates each date (the "Vesting Date") upon which
the Holder shall be entitled to exercise the Warrant with respect to the number
of Shares granted as indicated beside the date, provided that the Seller User
Agreement between the Company and Dole Fresh Flowers, Inc. entered into as of
December 10, 1999 (the "Seller User Agreement") is in full force and effect and
has not been terminated prior to any applicable Vesting Date:
Number of Shares Vesting Date
---------------- ------------
58,337 Shares January 1, 2000
58,333 Shares February 1, 2000 and continuing thereafter on the
1st calendar day of each month for ten (10)
successive months, until December 1, 2000
25,000 Shares January 1, 2001 and continuing thereafter on the
1st calendar day of each month for eleven (11)
successive months, until December 1, 2001
TOTAL SHARES: ONE MILLION
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in any period prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date.
<PAGE> 2
Upon termination of the Seller User Agreement, any unvested portion of the
Warrant shall terminate and be null and void, but any vested portion of the
Warrant still may be exercised. The number of shares of Common Stock purchasable
hereunder and the Current Warrant Price are subject to adjustment from time to
time in the manner provided in Article 3 below. Certain terms in this Warrant
are defined in Article 4 below.
ARTICLE 1
EXERCISE OF WARRANTS
SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3
below, to exercise this Warrant in whole or in part, the Holder shall deliver to
the Company at the Warrant Office designated pursuant to Section 2.1: (i) a
written notice, in substantially the form of the Subscription Notice appearing
at the end of this Warrant, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased
and the nature of payment, whether by check or by this Warrant (pursuant to
Section 1.4) or by a combination thereof; (ii) a certified or official bank
check payable to the order of the Company and/or a cancellation of a number of
warrants (pursuant to Section 1.4) (and/or any other form of consideration which
the Company and the holder hereof may have agreed to accept in payment of the
Current Warrant Price) in the aggregate equal to the aggregate Current Warrant
Price of the number of shares of Common Stock being purchased; and (iii) this
Warrant. The Company shall as promptly as practicable, and in any event within
10 days after receipt by the Company of such notice, execute and deliver or
cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in the denomination as may be specified in said notice and
shall be issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person so designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date the consideration specified for such shares is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Warrant evidencing the rights of such
holder to purchase the remaining shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of such holder, appropriate notation may be made on
this Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of such stock certificates and any new Warrant, except
that, in case such stock certificates or new Warrant shall be registered in a
name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
issuance of such stock certificate or certificates or any new Warrant shall be
paid by the holder hereof at the time of delivering the notice of exercise
mentioned above or promptly upon receipt of a written request of the Company for
payment of the same.
SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon, subject to registration
under the Exchange Act.
SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not
be required upon any exercise of this Warrant to issue a certificate
representing any fraction of a share of Common Stock, but, in lieu thereof,
shall pay Holder cash in an amount equal to a corresponding fraction (calculated
to
2
<PAGE> 3
the nearest 1/100 of a share) of the Current Market Price of one share of Common
Stock as of the date of receipt by the Company of notice of exercise of this
Warrant.
SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any
exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of
payment of the Current Warrant Price in cash, surrender this Warrant (or any
successor hereto or fraction hereof) (valued for such purpose at the Current
Market Price of the underlying Common Stock for which such Warrant is
exercisable on the date of such exercise less the Current Warrant Price then in
effect) and apply all or a portion of the amount so determined to the payment of
the Current Warrant Price for the number of shares of Common Stock being
purchased.
SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear a legend in
substantially the following form (and any additional legend required by any
securities exchange upon which such Warrant Shares may, at the time of such
exercise, be listed) on the face thereof:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR THE WRITTEN OPINION OF
COUNSEL TO WORLD COMMERCE ONLINE, INC., THAT SUCH REGISTRATION IS NOT
REQUIRED."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of: (i) a public distribution pursuant to a registration statement; or (ii) an
exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities
represented thereby) shall also bear such legend.
ARTICLE 2
WARRANT OFFICE; OWNERSHIP, TRANSFER
OF WARRANT
SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 9677 Tradeport Drive, Orlando, Florida
32827, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is initially registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing hereon made
by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of evidence satisfactory to the
Company that this Warrant has been transferred as provided in Section 2.3.
SECTION 2.3. TRANSFER OF WARRANT. This Warrant and all rights hereunder
may not be alienated, assigned, pledged or otherwise transferred, in whole or in
part, other than by Holder by will or the laws of descent and distribution, and
any attempt to make any such prohibited transfer shall be null and void.
3
<PAGE> 4
ARTICLE 3
ANTI-DILUTION PROVISIONS
SECTION 3.1. ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in Section 3.2 below. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Current Warrant Price resulting from such adjustment.
SECTION 3.2. EFFECT OF "SPLIT -UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
ARTICLE 4
CERTAIN DEFINITIONS
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"ACT": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"COMMISSION": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"CURRENT MARKET PRICE": the "Closing Price" (as defined below) of the
Common Stock on the last business day immediately preceding any date of
reference. For the purpose of determining Current Market Price, the "Closing
Price" of the Common Stock on any business day shall be: (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, the last reported sale price of Common Stock on such exchange; (ii) if
the Common Stock is listed or admitted for trading on any tier of The Nasdaq
Stock Market, the last reported sale price of Common Stock on such tier; or
(iii) if the Common Stock is traded in the over-the-counter market, the average
of the closing bid and asked prices for the Common Stock as quoted on the OTC
Bulletin Board.
"CURRENT WARRANT PRICE" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time.
The Current Warrant Price is subject to adjustment from time to time pursuant to
Article 3 above.
4
<PAGE> 5
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"OUTSTANDING": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article 3 above) at such date, except shares then held
in the treasury of the Company.
"PERSON": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"TOTAL WARRANTS": the sum of the aggregate number of shares of: (i)
Common Stock purchasable by the holder(s) upon exercise of the Warrant then
outstanding; and (ii) Warrant Shares which had been issued pursuant to the
exercise of the Warrant.
"WARRANT OFFICE": see Section 2.1 above.
"WARRANT SHARES": the shares of Common Stock purchasable or purchased
by the Warrantholder upon the exercise of the Warrant.
"WARRANTHOLDER": the registered holder of the Warrant or any related
Warrant Shares.
"WARRANT": the warrant issued by the Company hereunder evidencing the
right to purchase an aggregate of 1,000,000 shares of Common Stock and all
warrants issued in substitution or subdivision hereof.
ARTICLE 5
CERTAIN COVENANTS OF THE COMPANY
The Company represents, warrants, covenants and agrees that:
(a) It will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of this
Warrant sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) Before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of this Warrant, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) If any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be;
5
<PAGE> 6
(d) This Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
ARTICLE 6
CERTAIN COVENANTS OF THE HOLDER
The Holder represents, warrants, covenants and agrees that:
(a) This transaction is exempt from the Act and, accordingly
neither the Warrant nor the Warrant Shares have been registered under the Act;
they are acquiring the Warrant and Warrant Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Warrant or Warrant Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Warrant or Warrant Shares; because the
Warrant and Warrant Shares will not have been registered under the Act, the
Company will not permit the transfer of such shares without registration under
the Act, or upon the issuance to the Company of a favorable opinion of its
counsel to the effect that such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable state
security laws; and the share certificates representing the Warrant Shares will
be issued with a restrictive legend providing notice of such restriction;
(b) Holder has had an opportunity to ask questions of, and
receive answers from, appropriate officers and representatives of the Company
concerning the terms and conditions of the issuance of this Warrant and the
Warrant Shares and to obtain any additional information concerning the Company
which they have requested; and
(c) The Company has made available for inspection by them
various documents connected with the Company's business and has not refused in
any way to permit them to inspect any document requested by them to be
inspected.
ARTICLE 7
NOTICE
Any notice or other document required to be given or delivered to the
Warrantholder shall be delivered at, or sent by certified or registered mail to
Holder at the last address shown on the books of the Company maintained at the
Warrant Office for the registration of the Warrants or at any more recent
address of which Warrantholder shall have notified the Company in writing. Any
notice or other document required or permitted to be given or delivered to
holders of record of outstanding Warrant Shares shall be delivered at, or sent
by certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company. Any notice or other
document required or permitted to be given or delivered to the Company, other
than such notice or documents required to be delivered to the Warrant Office,
shall be delivered at, or sent by certified or registered mail to, the office of
the Company at 9677 Tradeport Drive, Orlando, Florida 32827, or such other
address within the United States of America as shall have been furnished by the
Company to the Warrantholders and the holders of record of Warrant Shares. Any
notice or other document sent by certified or registered mail, return receipt
requested, shall be deemed to have been delivered and received when sent if the
receipt is appropriately completed and returned. Notices or documents delivered
in any other manner than as set forth above shall be deemed to have been
delivered only when and if received.
6
<PAGE> 7
ARTICLE 8
LIMITATIONS OF LIABILITY;
NOT STOCKHOLDERS
No provision of this Warrant shall be construed as conferring upon the
holder hereof the right to vote, consent, receive dividends or receive notice
other than as herein expressly provided in respect of meetings of stockholders
for the election of directors of the Company or any other matter whatsoever as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the purchase price of any Warrant
Shares or as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
ARTICLE 9
LOSS, DESTRUCTION, ETC. OF WARRANTS
Upon receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of any Warrant, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Article 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
ARTICLE 10
LAW GOVERNING
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of Florida, without reference to its
choice of law principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name effective as of the 10th day of December, 1999.
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
-------------------------------------------
Robert Shaw
President and Chief Executive Officer
7
<PAGE> 8
SUBSCRIPTION NOTICE
World Commerce Online, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, _______ shares of the Common Stock covered by said Warrant and (a)
herewith (1) makes payment in full therefor of $___________ by certified or
official bank check payable to the order of the Company, or (2) surrenders to
the Company that number of warrants required for full payment of the shares to
be purchased; and (b) requests (1) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to __________________________________, whose address is
________________________________________________________ and (2) if such shares
shall not include all of the shares issuable as provided in said Warrant, that a
new Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
------------------------------------
Signature Guaranteed:
Dated:
----------------------------
8
<PAGE> 1
EXHIBIT 10.1
---------------------------------------
WORLD COMMERCE ONLINE, INC.
1999 STOCK OPTION PLAN
---------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
World Commerce Online, Inc., a Delaware corporation (the "Company"), and its
Subsidiaries by providing an additional incentive to attract and retain
qualified and competent persons who provide services to the Company and its
Subsidiaries, and upon whose efforts and judgment the success of the Company and
its Subsidiaries is largely dependent, through the encouragement of stock
ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the committee appointed by the Board
pursuant to Section 13(a) hereof.
(c) "Common Stock" shall mean the Company's Common Stock, par value
$.001 per share.
(d) "Director" shall mean a member of the Board.
(e) "Fair Market Value" of a Share on any date of reference shall
mean the "Closing Price" (as defined below) of the Common Stock on the last
business day immediately preceding such date. For the purpose of determining
Fair Market Value, the "Closing Price" of the Common Stock on any business day
shall be: (i) if the Common Stock is listed or admitted for trading on any
United States national securities exchange, the last reported sale price of
Common Stock on such exchange; (ii) if the Common Stock is listed or admitted
for trading on any tier of The Nasdaq Stock Market, the last reported sale price
of Common Stock on such tier; (iii) if the Common Stock is traded in the
over-the-counter market, the average of the closing bid and asked prices for the
Common Stock as quoted on the OTC Bulletin Board; or (iv) if neither (i), (ii),
or (iii) above is applicable, then Fair Market Value shall be determined in good
faith by the Committee in a fair and uniform manner.
(f) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Internal Revenue Code.
<PAGE> 2
(g) "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(h) "Non-Qualified Stock Option" shall mean an Option which is not
an Incentive Stock Option.
(i) "Officer" shall mean the Company's Chairman of the Board,
President, Chief Executive Officer, principal financial officer, principal
accounting officer, any vice-president of the Company in charge of a principal
business unit, division or function (such as sales, administration or finance),
any other officer who performs a policy-making function, or any other person who
performs similar policy-making functions for the Company. Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this paragraph, the phrase
"policy-making function" does not include policy-making functions that are not
significant. If pursuant to Item 401(b) of Regulation S-K (17 C.F.R. ss.
229.401(b)) the Company identifies a person as an "executive officer," the
person so identified shall be deemed an "Officer" even though such person may
not otherwise be an "Officer" pursuant to the foregoing provisions of this
paragraph.
(j) "Option" (when capitalized) shall mean any option granted under
this Plan.
(k) "Optionee" shall mean a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(l) "Outside Director" shall mean a member of the Board who
qualifies as an "outside director" under Section 162(m) of the Internal Revenue
Code and the regulations thereunder and as a "Non-Employee Director" under Rule
16b-3 promulgated under the Securities Exchange Act.
(m) "Plan" shall mean this 1999 Stock Option Plan for the Company.
(n) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(o) "Share" shall mean a share of Common Stock.
(p) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AVAILABLE FOR OPTION GRANTS. The Committee may grant to
Optionees from time to time Options to purchase an aggregate of up to Three
Million (3,000,000) Shares from the Company's authorized and unissued Shares. If
any Option granted under the Plan shall terminate, expire, or be cancelled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares.
-2-
<PAGE> 3
4. INCENTIVE AND NON-QUALIFIED OPTIONS.
(a) An Option granted hereunder shall be either an Incentive Stock
Option or a Non-Qualified Stock Option as determined by the Committee at the
time of grant of such Option and shall clearly state whether it is an Incentive
Stock Option or a Non-Qualified Stock Option. All Incentive Stock Options shall
be granted within 10 years from the effective date of this Plan. Incentive Stock
Options may not be granted to any person who is not an employee of the Company
or any Subsidiary.
(b) Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Section
422(b) of the Internal Revenue Code are exercisable for the first time by any
individual during any calendar year (under all plans of the Company and its
parent and subsidiary corporations as defined in Section 424 of the Internal
Revenue Code), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons selected by the Committee from the class of all regular
employees of, or persons who provide consulting or other services as independent
contractors to, the Company or its Subsidiaries, including Directors and
Officers who are regular employees. Any person who files with the Committee, in
a form satisfactory to the Committee, a written waiver of eligibility to receive
any Option under this Plan shall not be eligible to receive any Option under
this Plan for the duration of such waiver.
(b) No Options shall be granted to any person unless such person,
prior to the granting of such Options, shall have executed a
confidentiality/non-competition agreement in a form satisfactory to the
Committee.
(c) In granting Options, the Committee shall take into consideration
the contribution the person has made to the success of the Company or its
Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation:
(i) prescribing the date or dates on which the Option becomes exercisable; (ii)
providing that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both; or (iii)
relating an Option to the continued employment of the Optionee for a specified
period of time, provided that such terms and conditions are not more favorable
to an Optionee than those expressly permitted herein.
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<PAGE> 4
(d) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither the Plan nor
any Option granted under the Plan shall confer upon any person any right to
employment or continuance of employment by the Company or its Subsidiaries.
(e) Notwithstanding any other provision of this Plan, an Incentive
Stock Option shall not be granted to any person owning directly or indirectly
(through attribution under Section 424(d) of the Internal Revenue Code) at the
date of grant, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company (or of its parent or subsidiary
corporation (as defined in Section 424 of the Internal Revenue Code) at the date
of grant) unless the option price of such Option is at least 110% of the Fair
Market Value of the Shares subject to such Option on the date the Option is
granted, and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
(f) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Options
granted to any one Optionee may not exceed 500,000, subject to adjustment as
provided in Section 10 hereof.
6. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; PROVIDED, HOWEVER, that in no event shall the option price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when: (a)
the Company has received written notice of such exercise in accordance with the
terms of the Option; (b) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made; and (c) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company or Subsidiary employing the Optionee to withhold in accordance with
applicable Federal or state tax withholding requirements. The consideration to
be paid for the Shares to be issued upon exercise of an Option as well as the
method of payment of the exercise price and of any withholding and employment
taxes applicable thereto, shall be determined by the Committee and may in the
discretion of the Committee consist of: (1) cash; (2) certified or official bank
check; (3) money order; (4) Shares that have been held by the Optionee for at
least six (6) months (or such other Shares as the Company determines will not
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<PAGE> 5
cause the Company to recognize for financial accounting purposes a charge for
compensation expense); (5) pursuant to a "cashless exercise" procedure, by
delivery of a properly executed exercise notice together with such other
documentation, and subject to such guidelines, as the Committee shall require to
effect an exercise of the Option and delivery to the Company by a licensed
broker acceptable to the Company of proceeds from the sale of Shares or a margin
loan sufficient to pay the exercise price and any applicable income or
employment taxes; or (6) in such other consideration as the Committee deems
appropriate, or by a combination of the above. In the case of an Incentive Stock
Option, the permissible methods of payment shall be specified at the time the
Option is granted. The Committee in its sole discretion may accept a personal
check in full or partial payment of any Shares. If the exercise price is paid in
whole or in part with Shares, or through the withholding of Shares issuable upon
exercise of the Option, the value of the Shares surrendered or withheld shall be
their Fair Market Value on the date the Option is exercised. The Company in its
sole discretion may, on an individual basis or pursuant to a general program
established in connection with this Plan, lend money to an Optionee, guarantee a
loan to an Optionee, or otherwise assist an Optionee to obtain the cash
necessary to exercise all or a portion of an Option granted hereunder or to pay
any tax liability of the Optionee attributable to such exercise. If the exercise
price is paid in whole or part with Optionee's promissory note, such note shall:
(i) provide for full recourse to the maker; (ii) be collateralized by the pledge
of the Shares that the Optionee purchases upon exercise of such Option; (iii)
bear interest at the prime rate of the Company's principal lender; and (iv)
contain such other terms as the Committee in its sole discretion shall
reasonably require. No Optionee shall be deemed to be a holder of any Shares
subject to an Option unless and until either: (A) a stock certificate for such
Shares is issued to such person(s) under the terms of this Plan; or (B) the
transaction is recorded upon the books of the Company. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as expressly provided
in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in Section 8(a) and/or (b)
below. Unless otherwise provided in any Option or this Section 8, an Option
shall be exercisable in equal annual installments over a 4 year period from the
date on which the Option is granted.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of 10 years from the date on which the Option is granted.
(b) The Committee may in its sole discretion, accelerate the date on
which any Option may be exercised and may accelerate the vesting of any Shares
subject to any Option or previously acquired by the exercise of any Option.
9. TERMINATION OF OPTION PERIOD. Unless otherwise provided in any
Option:
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
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<PAGE> 6
(i) fifteen months after the date on which the Optionee's
employment is terminated other than by reason of: (A) Cause, which, solely for
purposes of this Plan, shall mean the termination of the Optionee's employment
by reason of (1) an action or omission of the Optionee which constitutes a
material breach of, or failure or refusal (other than by reason of his
disability) to perform his duties for which he was hired, which, if curable, is
not cured within fifteen (15) days after receipt by the Optionee of written
notice of same; (2) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of trust in connection with the performance
of his duties as an employee of the Company; (3) commission of any crime which
involves moral turpitude; or (4) gross negligence in connection with the
performance of the Optionee's duties hereunder, which, if curable, is not cured
within fifteen (15) days after written receipt by the Optionee of written notice
of same; (B) the Optionee terminating his employment Without Good Reason, which,
solely for purposes of this Plan, shall mean the termination of the Optionee's
employment by the Optionee for any reason other than (1) the assignment to the
Optionee of any duties materially inconsistent with the Optionee's current
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Optionee; (2) any failure by the Company to pay the Optionee his then current
salary in installments consistent with the Company's normal payroll schedule,
subject to applicable withholding and other taxes, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Optionee; or (3) the Company's requiring the Optionee to be based at any office
or location outside of Florida, except for travel reasonably required in the
performance of the Executive's responsibilities; (C) a mental or physical
disability (within the meaning of Internal Revenue Code Section 22(e)) of the
Optionee as determined by a medical doctor satisfactory to the Committee; or (D)
death of the Optionee;
(ii) immediately upon the termination of the Optionee's
employment with the Company and its Subsidiaries for Cause or Without Good
Reason;
(iii) twelve months after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Internal Revenue Code Section 22(e)) as determined by a medical
doctor satisfactory to the Committee; or
(iv) (A) twelve months after the date of termination of the
Optionee's employment by reason of death of the Optionee, or, if later, (B)
three months after the date on which the Optionee shall die if such death shall
occur during the one year period specified in Subsection 9(a)(iii) hereof.
All references herein to the termination of the Optionee's employment shall, in
the case of a Optionee who is not an employee of the Company or a Subsidiary,
refer to the termination of the Optionee's service with the Company.
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<PAGE> 7
(b) To the extent not previously exercised, each Option shall
terminate immediately in the event of: (i) the liquidation or dissolution of the
Company; or (ii) any reorganization, merger, consolidation or other form of
corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) hereof. The Committee shall give written notice of any proposed
transaction referred to in this Section 9(b) a reasonable period of time prior
to the closing date for such transaction (which notice may be given either
before or after approval of such transaction), in order that Optionees may have
a reasonable period of time prior to the closing date of such transaction within
which to exercise any Options that then are exercisable (including any Options
that may become exercisable upon the closing date of such transaction). An
Optionee may condition his exercise of any Option upon the consummation of a
transaction referred to in this Section 9(b).
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under the Plan, or available for grant to any
person under the Plan, so that the same percentage of the Company's issued and
outstanding Shares shall continue to be subject to being so optioned; and
(ii) the Committee may, in its discretion, make any adjustments
it deems appropriate in the number of Shares and the exercise price per Share
thereof then subject to any outstanding Option, so that the same percentage of
the Company's issued and outstanding Shares shall remain subject to purchase at
the same aggregate exercise price.
(b) Unless otherwise provided in any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate so as to
preserve but not increase benefits under the Plan.
(c) In the event of a proposed sale of all or substantially all of
the Company's assets or any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, where the
securities of the successor corporation, or its parent company, are issued to
the Company's shareholders, then the successor corporation or a parent of the
successor corporation may, with the consent of the Committee, assume each
outstanding Option or substitute an equivalent option or right. If the successor
corporation, or its parent, does not cause such an assumption or substitution to
occur, or the Committee does not consent to such an assumption or substitution,
then each Option shall terminate pursuant to Section 9(b) hereof upon the
consummation of sale, merger, consolidation or other corporate transaction.
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<PAGE> 8
(d) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
a direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made to, the number of or exercise price for Shares then
subject to outstanding Options granted under the Plan.
(e) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate: (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) No Incentive Stock Option and, unless the prior written consent
of the Committee is obtained (which consent may be withheld for any reason) and
the transaction does not violate the requirements of Rule 16b-3 promulgated
under the Securities Exchange Act, no Non-Qualified Stock Option shall be
subject to alienation, assignment, pledge, charge or other transfer other than
by the Optionee by will or the laws of descent and distribution, and any attempt
to make any such prohibited transfer shall be void. Each Option shall be
exercisable during the Optionee's lifetime only by the Optionee, or in the case
of a Non-Qualified Stock Option that has been assigned or transferred with the
prior written consent of the Committee, only by the permitted assignee.
(b) No Shares acquired by an Officer or Director pursuant to the
exercise of an Option may be sold, assigned, pledged or otherwise transferred
prior to the expiration of the six-month period following the date on which the
Option was granted, unless the transaction does not violate the requirements of
Rule 16b-3 promulgated under the Securities Exchange Act.
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<PAGE> 9
12. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Plan, the Company
shall not be obligated to issue any Shares unless it is advised by counsel of
its selection that it may do so without violation of the applicable Federal and
State laws pertaining to the issuance of securities, and may require any stock
so issued to bear a legend, may give its transfer agent instructions, and may
take such other steps, as in its judgment are reasonably required to prevent any
such violation.
(b) As a condition to any sale or issuance of Shares upon exercise
of any Option, the Committee may require such agreements or undertakings as the
Committee may deem necessary or advisable to facilitate compliance with any
applicable law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares to
be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound by
any legends endorsed upon the certificate(s) for such Shares that are, in the
opinion of the Committee, necessary or appropriate to facilitate compliance with
the provisions of any securities laws deemed by the Committee to be applicable
to the issuance and transfer of such Shares.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a committee appointed by the
Board which shall be composed of two or more Directors all of whom shall be
Outside Directors. The membership of the Committee shall be constituted so as to
comply at all times with the applicable requirements of Rule 16b-3 promulgated
under the Securities Exchange Act and Section 162(m) of the Internal Revenue
Code. The Committee shall serve at the pleasure of the Board and shall have the
powers designated herein and such other powers as the Board may from time to
time confer upon it.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The determinations by the
Committee, and the interpretation and construction of any provision of the Plan
or any Option by the Committee, shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee shall
be made either: (i) by a majority vote of the members of the Committee at a
meeting; or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
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<PAGE> 10
14. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee or beneficiary, any law or regulation of any governmental authority
having jurisdiction in the premises shall require the Company to withhold, or to
make any deduction for, any taxes or take any other action in connection with
the issuance or delivery then to be made, such issuance or delivery shall be
deferred until such withholding or deduction shall have been provided for by the
Optionee or beneficiary, or other appropriate action shall have been taken.
15. INTERPRETATION.
(a) As it is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 promulgated under the Securities Exchange Act ("Rule
16b-3"), any ambiguities or inconsistencies in construction of the Plan shall be
interpreted to give effect to such intention, and if any provision of the Plan
is found not to be in compliance with Rule 16b-3, such provision shall be deemed
null and void to the extent required to permit the Plan to comply with Rule
16b-3. The Committee may from time to time adopt rules and regulations under,
and amend, the Plan in furtherance of the intent of the foregoing.
(b) The Plan and any Option agreements entered into pursuant to the
Plan shall be administered and interpreted so that all Incentive Stock Options
granted under the Plan will qualify as Incentive Stock Options under section 422
of the Internal Revenue Code. If any provision of the Plan or any such Option
agreement should be held invalid for the granting of Incentive Stock Options or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan and the Option agreement shall be
construed and enforced as if such provision had never been included in the Plan
or the Option agreement.
(c) This Plan shall be governed by the laws of the State of Florida.
(d) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee may from
time to time amend, suspend or terminate the Plan or any Option; PROVIDED,
HOWEVER, that, any amendment to the Plan shall be subject to the approval of the
Company's shareholders if such shareholder approval is required by any federal
or state law or regulation (including, without limitation, Rule 16b-3 or to
comply with Section 162(m) of the Internal Revenue Code) or the rules of any
Stock exchange or automated quotation system on which the Common Stock may then
be listed or granted. Except to the extent provided in Sections 9 and 10 hereof,
no amendment, suspension or termination of the Plan or any Option issued
hereunder shall substantially impair the rights or benefits of any Optionee
pursuant to any Option previously granted without the consent of the Optionee.
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<PAGE> 11
17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is the date on which the Board adopts this Plan, and the Plan shall terminate
ten years from such date. The Plan shall be submitted to the shareholders of the
Company for their approval and adoption and Options hereunder may be granted
prior to such approval and adoption but contingent upon such approval and
adoption.
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<PAGE> 1
Exhibit 10.2
WORLD COMMERCE ONLINE, INC.
STOCK OPTION AGREEMENT
FOR
[ ]
AGREEMENT
1. Grant of Option. World Commerce Online, Inc. (the "Company")
hereby grants, as of _____________, 1999 (the "Grant Date"), to
______________________ (the "Optionee") an option (the "Option") to purchase up
to ____________________________ shares of the Company's Common Stock, $.001 par
value per share (the "Shares"), at an exercise price per share equal to
$_______. The Option is issued pursuant to the Company's 1999 Stock Option Plan
(the "Plan"), which is incorporated herein for all purposes. The Option is an
Incentive Stock Option, and not a Nonqualified Stock Option. The Optionee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all of the
terms and conditions hereof and thereof and all applicable laws and regulations.
The Option is subject to: (a) the receipt by the Optionee of the required
disclosures under Rule 701 (e) of the Securities Act of 1933; and (b) the terms
and conditions set forth herein.
2. Definitions. Unless otherwise provided herein, terms used
herein that are defined in the Plan and not defined herein shall have the
meanings attributed thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Sections 6
or 9 of this Agreement, or in the Plan, the Option is exercisable in
installments as provided below, which shall be cumulative. To the extent that
the Option has become exercisable with respect to a percentage of Shares as
provided below, the Option may thereafter be exercised by the Optionee, in whole
or in part, at any time or from time to time prior to the expiration of the
Option as provided herein. The following table indicates each date (the "Vesting
Date") upon which the Optionee shall be entitled to exercise the Option with
respect to the percentage of Shares granted as indicated beside the date,
provided that the Optionee has been continuously employed by the Company or a
Subsidiary through and on the applicable Vesting Date:
Percentage of Shares Vesting Date
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Except as
otherwise specifically provided herein, upon an Optionee's termination of
employment with the Company and its Subsidiaries, any unvested portion of the
Option shall terminate and be null and void.
4. Method of Exercise. The vested portion of the Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by the
Company pursuant to the provisions of the Plan. Such written notice shall be
signed by the Optionee and
<PAGE> 2
shall be delivered in person or by certified mail to the Secretary of the
Company. This Option shall be deemed to be exercised after: (a) receipt by the
Company of such written notice; (b) full payment of the aggregate option price
of the Shares as to which the Option is exercised has been made; and (c)
arrangements that are satisfactory to the Committee in its sole discretion have
been made for Optionee's payment to the Company of the amount that is necessary
to be withheld in accordance with applicable Federal or state withholding
requirements. No Shares will be issued pursuant to the Option unless and until
such issuance and such exercise shall comply with all relevant provisions of
applicable law, including the requirements of any stock exchange upon which the
Shares then may be traded.
5. Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(1) cash; (2) certified or official bank check; (3) money order; (4) Shares that
have been held by the Optionee for at least six (6) months (or such other Shares
as the Company determines will not cause the Company to recognize for financial
accounting purposes a charge for compensation expense); (5) pursuant to a
"cashless exercise" procedure, by delivery of a properly executed exercise
notice together with such other documentation, and subject to such guidelines,
as the Committee shall require to effect an exercise of the Option and delivery
to the Company by a licensed broker acceptable to the Company of proceeds from
the sale of Shares or a margin loan sufficient to pay the exercise price and any
applicable income or employment taxes; or (6) in such other consideration as the
Committee deems appropriate, or by a combination of the above.
6. Termination of Option.
(a) Any unexercised portion of the Option shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of:
(i) fifteen months after the date on which the
Optionee's employment is terminated other than by reason of: (A) Cause, which,
solely for purposes of the Plan, shall mean the termination of the Optionee's
employment by reason of (1) an action or omission of the Optionee which
constitutes a material breach of, or failure or refusal (other than by reason of
his disability) to perform his duties for which he was hired, which, if curable,
is not cured within fifteen (15) days after receipt by the Optionee of written
notice of same; (2) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (3) commission of any
crime which involves moral turpitude; or (4) gross negligence in connection with
the performance of the Optionee's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Optionee of written
notice of same; (B) the Optionee terminating his employment Without Good Reason,
which, solely for purposes of the Plan, shall mean the termination of the
Optionee's employment by the Optionee for any reason other than (1) the
assignment to the Optionee of any duties materially inconsistent with the
Optionee's current position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Optionee; (2) any failure by the Company to pay the Optionee his then
current
2
<PAGE> 3
salary in installments consistent with the Company's normal payroll schedule,
subject to applicable withholding and other taxes, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Optionee; or (3) the Company's requiring the Optionee to be based at any office
or location outside of Florida, except for travel reasonably required in the
performance of the Executive's responsibilities; (C) a mental or physical
disability (within the meaning of Internal Revenue Code Section 22(e)) of the
Optionee as determined by a medical doctor satisfactory to the Committee; or (D)
death of the Optionee;
(ii) immediately upon the termination of the
Optionee's employment with the Company and its Subsidiaries for Cause or Without
Good Reason;
(iii) twelve months after the date on which the
Optionee's employment with the Company and its Subsidiaries is terminated by
reason of a mental or physical disability (within the meaning of Section 22(e)
of the Internal Revenue Code) as determined by a medical doctor satisfactory to
the Committee;
(iv) (A) twelve months after the date of
termination of the Optionee's employment with the Company and its Subsidiaries
by reason of the death of the Optionee, or, if later, (B) three months after the
date on which the Optionee shall die if such death shall occur during the one
year period specified in Subsection 6(a)(iii) hereof; or
(v) the tenth anniversary of the date as of
which the Option is granted.
(b) To the extent not previously exercised, the Option
shall terminate immediately in the event of: (i) the liquidation or dissolution
of the Company; or (ii) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) of the Plan. The Committee shall give written notice of any
proposed transaction referred to in this Section 6(b) a reasonable period of
time prior to the closing date for such transaction (which notice may be given
either before or after approval of such transaction), in order that Optionees
may have a reasonable period of time prior to the closing date of such
transaction within which to exercise any Options that then are exercisable
(including any Options that may become exercisable upon the closing date of such
transaction). An Optionee may condition his exercise of any Option upon the
consummation of a transaction referred to in this Section 6(b).
7. Transferability. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution,
and during the lifetime of the Optionee the Option shall be exercisable only by
the Optionee, or the Optionee's guardian or legal representative. In addition,
the Option shall not be assigned, negotiated, pledged or hypothecated in any way
(whether by operation of law or otherwise), and the Option shall not be subject
to execution, attachment or similar process. Upon any attempt to transfer,
assign, negotiate, pledge or hypothecate the Option, or in the event of any levy
upon the Option by reason of any execution, attachment or similar process
contrary to the provisions hereof, the
3
<PAGE> 4
Option shall immediately become null and void.
8. No Rights of Stockholders. Neither the Optionee nor any
personal representative (or beneficiary) shall be, or shall have any of the
rights and privileges of, a stockholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
9. Acceleration of Exerciseability of Option. Notwithstanding
anything else to the contrary herein, the Option shall become, immediately,
fully exercisable in the event: (a) a "Change in Control," as defined below,
occurs; and (b) Optionee's employment with the Company is terminated by either:
(i) the Company for any reason other than for Cause (as defined in the Plan); or
(ii) the Optionee other than Without Good Reason (as defined in the Plan), at
anytime after the Board, whether at a formal meeting or otherwise, first
considers or discusses any transaction resulting in a Change in Control but
prior to forty-eight (48) months after the Grant Date. For purposes of the
Option, the term "Change in Control" shall mean:
(a) Approval by the Board, and shareholders of the
Company if required under applicable law, of: (i) a reorganization, merger,
consolidation or other form of corporate transaction or series of transactions,
in each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own 50% or more of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction; (ii) a
liquidation or dissolution of the Company; or (iii) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(b) Individuals who, as of the Grant Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the Grant Date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of the Option,
considered as though such person were a member of the Incumbent Board; or
(c) the acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act, of 50% or more of either the then outstanding
shares of the Company's Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in the
election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by: (i)
the Company or its Subsidiaries;
4
<PAGE> 5
(ii) any person, entity or "group" that as of the Grant Date owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act) of a Controlling Interest; or (iii) any employee benefit plan of
the Company or its Subsidiaries.
10. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
11. Law Governing. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of Florida.
12. Incentive Stock Option Treatment. The terms of this Option
shall be interpreted in a manner consistent with the intent of the Company and
the Optionee that the Option qualify as an Incentive Stock Option under Section
422 of the Code. If any provision of the Plan or the Agreement shall be
impermissible in order for the Option to qualify as an Incentive Stock Option,
then the Option shall be construed and enforced as if such provision had never
been included in the Plan or the Option.
13. Interpretation / Provisions of Plan Control. This Agreement is
subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee as
may be in effect from time to time. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the
Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. The Optionee accepts the Option subject to all the terms and
provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions arising under the Plan and this Agreement.
14. Notices. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and addressed,
in the case of the Company, to the Company's Secretary at 9677 Tradeport Drive,
Orlando, Florida 32827, or if the Company should move its principal office, to
such principal office, and, in the case of the Optionee, to the Optionee's last
permanent address as shown on the Company's records, subject to the right of
either party to designate some other address at any time hereafter in a notice
satisfying the requirements of this Section.
15. Tax Consequences. Set forth below is a brief summary as of the
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Option. There will be no regular federal
income tax liability upon the exercise of the Option, although the excess, if
any, of the fair market value of the Shares on the date of exercise over the
Exercise Price will be treated as an adjustment to the alternative
5
<PAGE> 6
minimum tax for federal tax purposes and may subject the Optionee to the
alternative minimum tax in the year of exercise.
(b) Disposition of Shares. If Shares transferred pursuant
to the Option are held for at least one year after exercise and are disposed of
at least two years after the Date of Grant, any gain realized on disposition of
the Shares will also be treated as long-term capital gain for federal income tax
purposes. If Shares purchased under an Option are disposed of within such
one-year period or within two years after the Date of Grant, any gain realized
on such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the difference between the Exercise Price and the
lesser of: (i) the fair market value of the Shares on the date of exercise; or
(ii) the sale price of the Shares.
(c) Notice of Disqualifying Disposition of Option Shares.
If Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to the Option on or before the later of: (i) the date two years after the Date
of Grant; (ii) the date one year after the date of exercise, the Optionee shall
immediately notify the Company in writing of such disposition. Optionee agrees
that Optionee may be subject to the income tax withholding by the Company on the
compensation income recognized by the Optionee from the early disposition by
payment in cash or out of the current earnings paid to the Optionee.
IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Agreement as of the ____ day of _____________, 1999.
COMPANY:
WORLD COMMERCE ONLINE, INC.
By:
---------------------------------------
Robert H. Shaw, Chief Executive Officer
6
<PAGE> 7
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.
Dated: OPTIONEE:
-----------------------------------
By:
---------------------------------
7
<PAGE> 1
Exhibit 10.3
WORLD COMMERCE ONLINE, INC.
STOCK OPTION AGREEMENT
FOR
[ ]
AGREEMENT
1. Grant of Option. World Commerce Online, Inc. (the "Company")
hereby grants, as of _____________, 1999 (the "Grant Date"), to
______________________ (the "Optionee") an option (the "Option") to purchase up
to _________________________________ shares of the Company's Common Stock,
$.001 par value per share (the "Shares"), at an exercise price per share equal
to $________. The Option is issued pursuant to the Company's 1999 Stock Option
Plan (the "Plan"), which is incorporated herein for all purposes. The Option is
a Nonqualified Stock Option, and not an Incentive Stock Option. The Optionee
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
of the terms and conditions hereof and thereof and all applicable laws and
regulations. The Option is subject to: (a) the receipt by the Optionee of the
required disclosures under Rule 701 (e) of the Securities Act of 1933; and (b)
the terms and conditions set forth herein.
2. Definitions. Unless otherwise provided herein, terms used
herein that are defined in the Plan and not defined herein shall have the
meanings attributed thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Sections 6
or 9 of this Agreement, or in the Plan, the Option is exercisable in
installments as provided below, which shall be cumulative. To the extent that
the Option has become exercisable with respect to a percentage of Shares as
provided below, the Option may thereafter be exercised by the Optionee, in
whole or in part, at any time or from time to time prior to the expiration of
the Option as provided herein. The following table indicates each date (the
"Vesting Date") upon which the Optionee shall be entitled to exercise the
Option with respect to the percentage of Shares granted as indicated beside the
date, provided that the Optionee has been continuously employed by the Company
or a Subsidiary through and on the applicable Vesting Date:
Percentage of Shares Vesting Date
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Except as
otherwise specifically provided herein, upon an Optionee's termination of
employment with the Company and its Subsidiaries, any unvested portion of the
Option shall terminate and be null and void.
4. Method of Exercise. The vested portion of the Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by
the Company pursuant to the provisions of the Plan. Such written notice shall
be signed by the Optionee and
<PAGE> 2
shall be delivered in person or by certified mail to the Secretary of the
Company. This Option shall be deemed to be exercised after: (a) receipt by the
Company of such written notice; (b) full payment of the aggregate option price
of the Shares as to which the Option is exercised has been made; and (c)
arrangements that are satisfactory to the Committee in its sole discretion have
been made for Optionee's payment to the Company of the amount that is necessary
to be withheld in accordance with applicable Federal or state withholding
requirements. No Shares will be issued pursuant to the Option unless and until
such issuance and such exercise shall comply with all relevant provisions of
applicable law, including the requirements of any stock exchange upon which the
Shares then may be traded.
5. Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the
Optionee: (1) cash; (2) certified or official bank check; (3) money order; (4)
Shares that have been held by the Optionee for at least six (6) months (or such
other Shares as the Company determines will not cause the Company to recognize
for financial accounting purposes a charge for compensation expense); (5)
pursuant to a "cashless exercise" procedure, by delivery of a properly executed
exercise notice together with such other documentation, and subject to such
guidelines, as the Committee shall require to effect an exercise of the Option
and delivery to the Company by a licensed broker acceptable to the Company of
proceeds from the sale of Shares or a margin loan sufficient to pay the
exercise price and any applicable income or employment taxes; or (6) in such
other consideration as the Committee deems appropriate, or by a combination of
the above.
6. Termination of Option.
(a) Any unexercised portion of the Option shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of:
(i) fifteen months after the date on which the
Optionee's employment is terminated other than by reason of: (A) Cause, which,
solely for purposes of the Plan, shall mean the termination of the Optionee's
employment by reason of (1) an action or omission of the Optionee which
constitutes a material breach of, or failure or refusal (other than by reason
of his disability) to perform his duties for which he was hired, which, if
curable, is not cured within fifteen (15) days after receipt by the Optionee of
written notice of same; (2) commission of any act which involves fraud,
embezzlement, misappropriation of funds, or breach of fiduciary duty in
connection with the performance of his duties as an employee of the Company;
(3) commission of any crime which involves moral turpitude; or (4) gross
negligence in connection with the performance of the Optionee's duties
hereunder, which, if curable, is not cured within fifteen (15) days after
written receipt by the Optionee of written notice of same; (B) the Optionee
terminating his employment Without Good Reason, which, solely for purposes of
the Plan, shall mean the termination of the Optionee's employment by the
Optionee for any reason other than (1) the assignment to the Optionee of any
duties materially inconsistent with the Optionee's current position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Optionee; (2) any failure
by the Company to pay the Optionee his then current
2
<PAGE> 3
salary in installments consistent with the Company's normal payroll schedule,
subject to applicable withholding and other taxes, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Optionee; or (3) the Company's requiring the Optionee to be based at any office
or location outside of Florida, except for travel reasonably required in the
performance of the Executive's responsibilities; (C) a mental or physical
disability (within the meaning of Internal Revenue Code Section 22(e)) of the
Optionee as determined by a medical doctor satisfactory to the Committee; or
(D) death of the Optionee;
(ii) immediately upon the termination of the
Optionee's employment with the Company and its Subsidiaries for Cause or
Without Good Reason;
(iii) twelve months after the date on which the
Optionee's employment with the Company and its Subsidiaries is terminated by
reason of a mental or physical disability (within the meaning of Section 22(e)
of the Internal Revenue Code) as determined by a medical doctor satisfactory to
the Committee;
(iv) (A) twelve months after the date of
termination of the Optionee's employment with the Company and its Subsidiaries
by reason of the death of the Optionee, or, if later, (B) three months after
the date on which the Optionee shall die if such death shall occur during the
one year period specified in Subsection 6(a)(iii) hereof; or
(v) the tenth anniversary of the date as of
which the Option is granted.
(b) To the extent not previously exercised, the Option
shall terminate immediately in the event of: (i) the liquidation or dissolution
of the Company; or (ii) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) of the Plan. The Committee shall give written notice of any
proposed transaction referred to in this Section 6(b) a reasonable period of
time prior to the closing date for such transaction (which notice may be given
either before or after approval of such transaction), in order that Optionees
may have a reasonable period of time prior to the closing date of such
transaction within which to exercise any Options that then are exercisable
(including any Options that may become exercisable upon the closing date of
such transaction). An Optionee may condition his exercise of any Option upon
the consummation of a transaction referred to in this Section 6(b).
3
<PAGE> 4
7. Transferability. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and
distribution, and during the lifetime of the Optionee the Option shall be
exercisable only by the Optionee, or the Optionee's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate
the Option, or in the event of any levy upon the Option by reason of any
execution, attachment or similar process contrary to the provisions hereof, the
Option shall immediately become null and void.
8. No Rights of Stockholders. Neither the Optionee nor any
personal representative (or beneficiary) shall be, or shall have any of the
rights and privileges of, a stockholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
9. Acceleration of Exerciseability of Option. Notwithstanding
anything else to the contrary herein, the Option shall become, immediately,
fully exercisable in the event: (a) a "Change in Control," as defined below,
occurs; and (b) Optionee's employment with the Company is terminated by either:
(i) the Company for any reason other than for Cause (as defined in the Plan);
or (ii) the Optionee other than Without Good Reason (as defined in the Plan),
at anytime after the Board, whether at a formal meeting or otherwise, first
considers or discusses any transaction resulting in a Change in Control but
prior to forty-eight (48) months after the Grant Date. For purposes of the
Option, the term "Change in Control" shall mean:
(a) Approval by the Board, and shareholders of the
Company if required under applicable law, of: (i) a reorganization, merger,
consolidation or other form of corporate transaction or series of transactions,
in each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own 50% or more of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction; (ii) a liquidation or dissolution of the Company; or (iii) the
sale of all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned);
(b) Individuals who, as of the Grant Date, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the Grant Date whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of the Option,
considered as though such person were a member of the Incumbent
4
<PAGE> 5
Board; or
(c) the acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act, of 50% or more of either the then outstanding
shares of the Company's Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in the
election of directors (hereinafter referred to as the ownership of a
"Controlling Interest") excluding, for this purpose, any acquisitions by: (i)
the Company or its Subsidiaries; (ii) any person, entity or "group" that as of
the Grant Date owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest; or
(iii) any employee benefit plan of the Company or its Subsidiaries.
10. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
11. Law Governing. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of Florida.
12. Interpretation/Provisions of Plan Control. This Agreement
is subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee
as may be in effect from time to time. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the
Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. The Optionee accepts the Option subject to all the terms and
provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan and this Agreement.
13. Notices. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Secretary at 9677
Tradeport Drive, Orlando, Florida 32827, or if the Company should move its
principal office, to such principal office, and, in the case of the Optionee,
to the Optionee's last permanent address as shown on the Company's records,
subject to the right of either party to designate some other address at any
time hereafter in a notice satisfying the requirements of this Section.
14. Tax Consequences. Set forth below is a brief summary as of
the date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of Option. There may be a regular federal
income tax liability upon the exercise of the Option. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the fair market value
5
<PAGE> 6
of the Shares on the date of exercise over the Exercise Price. If Optionee is
an employee, the Company will be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
(b) Disposition of Shares. If Shares are held for at
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.
IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Agreement as of the ______ day of ___________, 1999.
COMPANY:
WORLD COMMERCE ONLINE, INC.
By:
----------------------------------------
Robert H. Shaw, Chief Executive Officer
Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option, and
fully understands all provisions of the Option.
Dated: OPTIONEE:
---------------------
By:
----------------------------------------
6
<PAGE> 1
Exhibit 10.4
WORLD COMMERCE ONLINE, INC.
STOCK OPTION AGREEMENT
FOR
[ ]
AGREEMENT
1. Grant of Option. World Commerce Online, Inc. (the "Company")
hereby grants, as of __________, to ____________________ (the "Optionee") an
option (the "Option") to purchase up to _______________ shares of the Company's
Common Stock, $.001 par value per share (the "Shares"), at an exercise price
per share equal to $_____________. The Option is issued pursuant to the
Company's 1999 Stock Option Plan (the "Plan"), which is incorporated herein for
all purposes. The Option is an Incentive Stock Option, and not a Nonqualified
Stock Option. The Optionee hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all of the terms and conditions hereof and thereof
and all applicable laws and regulations. The Option is subject to: (a) the
receipt by the Optionee of the required disclosures under Rule 701 (e) of the
Securities Act of 1933; and (b) the terms and conditions set forth herein.
2. Definitions. Unless otherwise provided herein, terms used
herein that are defined in the Plan and not defined herein shall have the
meanings attributed thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Section 6
of this Agreement, or in the Plan, the Option is exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has
become exercisable with respect to a percentage of Shares as provided below,
the Option may thereafter be exercised by the Optionee, in whole or in part, at
any time or from time to time prior to the expiration of the Option as provided
herein. The following table indicates each date (the "Vesting Date") upon which
the Optionee shall be entitled to exercise the Option with respect to the
percentage of Shares granted as indicated beside the date, provided that the
Optionee has been continuously employed by the Company or a Subsidiary through
and on the applicable Vesting Date:
Percentage of Shares Vesting Date
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Upon an
Optionee's termination of employment with the Company and its Subsidiaries, any
unvested portion of the Option shall terminate and be null and void.
4. Method of Exercise. The vested portion of the Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by
the Company pursuant to the provisions of the Plan. Such written notice shall
be signed by the Optionee and shall be delivered in person or by certified mail
to the Secretary of the Company. This Option shall be deemed to be exercised
after: (a) receipt by the Company of such written notice; (b) full
<PAGE> 2
payment of the aggregate option price of the Shares as to which the Option is
exercised has been made; and (c) arrangements that are satisfactory to the
Committee in its sole discretion have been made for Optionee's payment to the
Company of the amount that is necessary to be withheld in accordance with
applicable Federal or state withholding requirements. No Shares will be issued
pursuant to the Option unless and until such issuance and such exercise shall
comply with all relevant provisions of applicable law, including the
requirements of any stock exchange upon which the Shares then may be traded.
5. Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the
Optionee: (1) cash; (2) certified or official bank check; (3) money order; (4)
Shares that have been held by the Optionee for at least six (6) months (or such
other Shares as the Company determines will not cause the Company to recognize
for financial accounting purposes a charge for compensation expense); (5)
pursuant to a "cashless exercise" procedure, by delivery of a properly executed
exercise notice together with such other documentation, and subject to such
guidelines, as the Committee shall require to effect an exercise of the Option
and delivery to the Company by a licensed broker acceptable to the Company of
proceeds from the sale of Shares or a margin loan sufficient to pay the
exercise price and any applicable income or employment taxes; or (6) in such
other consideration as the Committee deems appropriate, or by a combination of
the above.
6. Termination of Option.
(a) Any unexercised portion of the Option shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of:
(i) unless the Committee or the Board otherwise
determines in writing in its sole discretion, three months after the date on
which the Optionee's employment with the Company is terminated for any reason
other than by reason of (A) Cause, which, solely for purposes of this
Agreement, shall mean the termination of the Optionee's employment by reason of
the Optionee's willful misconduct or gross negligence, (B) a mental or physical
disability (within the meaning of Section 22(e) of the Internal Revenue Code)
of the Optionee as determined by a medical doctor satisfactory to the Committee
or the Board, or (C) death;
(ii) immediately upon the termination of the
Optionee's employment with the Company for Cause;
(iii) twelve months after the date on which the
Optionee's employment with the Company is terminated by reason of a mental or
physical disability (within the meaning of Section 22(e) of the Internal
Revenue Code) as determined by a medical doctor satisfactory to the Committee
or the Board;
(iv) twelve months after the date of termination
of the Optionee's employment with the Company by reason of the death of the
Optionee (or three months after the date on which the Optionee shall die if
such death shall occur during the one year period specified in paragraph (iii)
of this Section 6).
2
<PAGE> 3
(b) To the extent not previously exercised: (i) the
Option shall terminate immediately in the event of (1) the liquidation or
dissolution of the Company, or (2) any reorganization, merger, consolidation or
other form of corporate transaction in which the Company does not survive,
unless the successor corporation, or a parent or subsidiary of such successor
corporation, assumes the Option or substitutes an equivalent option or right
pursuant to Section 10(c) of the Plan; and (ii) the Committee or the Board in
its sole discretion may by written notice ("cancellation notice") cancel,
effective upon the consummation of any corporate transaction described in
Subsection 8(b)(i) of the Plan in which the Company does survive, the Option
(or portion thereof) that remains unexercised on such date. The Committee or
the Board shall give written notice of any proposed transaction referred to in
this Section 6(b) a reasonable period of time prior to the closing date for
such transaction (which notice may be given either before or after approval of
such transaction), in order that Optionee may have a reasonable period of time
prior to the closing date of such transaction within which to exercise the
Option if and to the extent that it then is exercisable (including any portion
of the Option that may become exercisable upon the closing date of such
transaction). The Optionee may condition his exercise of the Option upon the
consummation of a transaction referred to in this Section 6(b).
7. Transferability. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and
distribution, and during the lifetime of the Optionee the Option shall be
exercisable only by the Optionee, or the Optionee's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate
the Option, or in the event of any levy upon the Option by reason of any
execution, attachment or similar process contrary to the provisions hereof, the
Option shall immediately become null and void.
8. No Rights of Stockholders. Neither the Optionee nor any
personal representative (or beneficiary) shall be, or shall have any of the
rights and privileges of, a stockholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
9. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
10. Law Governing. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of Florida.
11. Incentive Stock Option Treatment. The terms of this Option
shall be interpreted in a manner consistent with the intent of the Company and
the Optionee that the Option qualify as an Incentive Stock Option under Section
422 of the Code. If any provision of the Plan or the Agreement shall be
impermissible in order for the Option to qualify as an Incentive Stock Option,
then the Option shall be construed and enforced as if such provision had never
been included in the Plan or the Option.
3
<PAGE> 4
12. Interpretation/Provisions of Plan Control. This Agreement
is subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee
as may be in effect from time to time. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the
Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. The Optionee accepts the Option subject to all the terms and
provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan and this Agreement.
13. Notices. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Secretary at 9677
Tradeport Drive, Orlando, Florida 32827, or if the Company should move its
principal office, to such principal office, and, in the case of the Optionee,
to the Optionee's last permanent address as shown on the Company's records,
subject to the right of either party to designate some other address at any
time hereafter in a notice satisfying the requirements of this Section.
14. Tax Consequences. Set forth below is a brief summary as of
the date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of Option. There will be no regular federal
income tax liability upon the exercise of the Option, although the excess, if
any, of the fair market value of the Shares on the date of exercise over the
Exercise Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject the Optionee to the alternative
minimum tax in the year of exercise.
(b) Disposition of Shares. If Shares transferred
pursuant to the Option are held for at least one year after exercise and are
disposed of at least two years after the Date of Grant, any gain realized on
disposition of the Shares will also be treated as long-term capital gain for
federal income tax purposes. If Shares purchased under an Option are disposed
of within such one-year period or within two years after the Date of Grant, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Exercise Price and the lesser of: (i) the fair market value of the Shares on
the date of exercise; or (ii) the sale price of the Shares.
(c) Notice of Disqualifying Disposition of Option Shares.
If Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to the Option on or before the later of: (i) the date two years after the Date
of Grant; (ii) the date one year after the date of exercise, the Optionee shall
immediately notify the Company in writing of such disposition. Optionee agrees
that Optionee may be subject to the income tax withholding by the Company on
the
4
<PAGE> 5
compensation income recognized by the Optionee from the early disposition by
payment in cash or out of the current earnings paid to the Optionee.
IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Agreement as of the ____ day of ____________, 1999.
COMPANY:
WORLD COMMERCE ONLINE, INC.
By:
------------------------------------------
Robert Shaw, Chief Executive Officer and
President
Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option, and
fully understands all provisions of the Option.
Dated: OPTIONEE:
---------------------
By:
------------------------------------------
[ ]
5
<PAGE> 1
Exhibit 10.5
WORLD COMMERCE ONLINE, INC.
STOCK OPTION AGREEMENT
FOR
[ ]
AGREEMENT
1. Grant of Option. World Commerce Online, Inc. (the "Company")
hereby grants, as of _______________, to ___________________ (the "Optionee")
an option (the "Option") to purchase up to ______________ shares of the
Company's Common Stock, $.001 par value per share (the "Shares"), at an
exercise price per share equal to $____________. The Option is issued pursuant
to the Company's 1999 Stock Option Plan (the "Plan"), which is incorporated
herein for all purposes. The Option is a Nonqualified Stock Option, and not an
Incentive Stock Option. The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all of the terms and conditions hereof and
thereof and all applicable laws and regulations. The Option is subject to: (a)
the receipt by the Optionee of the required disclosures under Rule 701 (e) of
the Securities Act of 1933; and (b) the terms and conditions set forth herein.
2. Definitions. Unless otherwise provided herein, terms used
herein that are defined in the Plan and not defined herein shall have the
meanings attributed thereto in the Plan.
3. Exercise Schedule. Except as otherwise provided in Section 6
of this Agreement, or in the Plan, the Option is exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has
become exercisable with respect to a percentage of Shares as provided below,
the Option may thereafter be exercised by the Optionee, in whole or in part, at
any time or from time to time prior to the expiration of the Option as provided
herein. The following table indicates each date (the "Vesting Date") upon which
the Optionee shall be entitled to exercise the Option with respect to the
percentage of Shares granted as indicated beside the date, provided that the
Optionee has been continuously employed by the Company or a Subsidiary through
and on the applicable Vesting Date:
Percentage of Shares Vesting Date
Except as otherwise specifically provided herein, there shall be no
proportionate or partial vesting in the periods prior to each Vesting Date, and
all vesting shall occur only on the appropriate Vesting Date. Upon an
Optionee's termination of employment with the Company and its Subsidiaries, any
unvested portion of the Option shall terminate and be null and void.
4. Method of Exercise. The vested portion of the Option shall be
exercisable in whole or in part in accordance with the exercise schedule set
forth in Section 3 hereof by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by
the Company pursuant to the provisions of the Plan. Such written notice shall
be signed by the Optionee and shall be delivered in person or by certified mail
to the Secretary of the Company. This Option shall be deemed to be exercised
after: (a) receipt by the Company of such written notice; (b) full payment of
the aggregate option price of the Shares as to which the Option is exercised has
been
<PAGE> 2
made; and (c) arrangements that are satisfactory to the Committee in its sole
discretion have been made for Optionee's payment to the Company of the amount
that is necessary to be withheld in accordance with applicable Federal or state
withholding requirements. No Shares will be issued pursuant to the Option unless
and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
5. Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the
Optionee: (1) cash; (2) certified or official bank check; (3) money order; (4)
Shares that have been held by the Optionee for at least six (6) months (or such
other Shares as the Company determines will not cause the Company to recognize
for financial accounting purposes a charge for compensation expense); (5)
pursuant to a "cashless exercise" procedure, by delivery of a properly executed
exercise notice together with such other documentation, and subject to such
guidelines, as the Committee shall require to effect an exercise of the Option
and delivery to the Company by a licensed broker acceptable to the Company of
proceeds from the sale of Shares or a margin loan sufficient to pay the
exercise price and any applicable income or employment taxes; or (6) in such
other consideration as the Committee deems appropriate, or by a combination of
the above.
6. Termination of Option.
(a) Any unexercised portion of the Option shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of:
(i) unless the Committee otherwise determines
in writing in its sole discretion, three months after the date on which the
Optionee's employment with the Company is terminated for any reason other than
by reason of (A) Cause, which, solely for purposes of this Agreement, shall
mean the termination of the Optionee's employment by reason of the Optionee's
willful misconduct or gross negligence, (B) a mental or physical disability
(within the meaning of Section 22(e) of the Internal Revenue Code) of the
Optionee as determined by a medical doctor satisfactory to the Committee, or
(C) death;
(ii) immediately upon the termination of the
Optionee's employment with the Company and its Subsidiaries for Cause;
(iii) twelve months after the date on which the
Optionee's employment with the Company and its Subsidiaries is terminated by
reason of a mental or physical disability (within the meaning of Section 22(e)
of the Internal Revenue Code) as determined by a medical doctor satisfactory to
the Committee;
(iv) (A) twelve months after the date of
termination of the Optionee's employment with the Company and its Subsidiaries
by reason of the death of the Optionee, or, if later, (B) three months after
the date on which the Optionee shall die if such death shall occur during the
one year period specified in Subsection 6(a)(iii) hereof; or
(v) the tenth anniversary of the date as of
which the Option is granted
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<PAGE> 3
(b) To the extent not previously exercised, the Option shall
terminate immediately in the event of: (i) the liquidation or dissolution of
the Company; or (ii) any reorganization, merger, consolidation or other form of
corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) of the Plan. The Committee shall give written notice of any
proposed transaction referred to in this Section 6(b) a reasonable period of
time prior to the closing date for such transaction (which notice may be given
either before or after approval of such transaction), in order that Optionees
may have a reasonable period of time prior to the closing date of such
transaction within which to exercise any Options that then are exercisable
(including any Options that may become exercisable upon the closing date of
such transaction). An Optionee may condition his exercise of any Option upon
the consummation of a transaction referred to in this Section 6(b).
7. Transferability. The Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and
distribution, and during the lifetime of the Optionee the Option shall be
exercisable only by the Optionee, or the Optionee's guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate
the Option, or in the event of any levy upon the Option by reason of any
execution, attachment or similar process contrary to the provisions hereof, the
Option shall immediately become null and void.
8. No Rights of Stockholders. Neither the Optionee nor any
personal representative (or beneficiary) shall be, or shall have any of the
rights and privileges of, a stockholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
9. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.
10. Law Governing. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of Florida.
11. Interpretation/Provisions of Plan Control. This Agreement
is subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee
as may be in effect from time to time. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the
Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. The Optionee accepts the Option subject to all the terms and
provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations of
the Committee upon any questions arising under the Plan and this Agreement.
3
<PAGE> 4
12. Notices. Any notice under this Agreement shall be in writing
and shall be deemed to have been duly given when delivered personally or when
deposited in the United States mail, registered, postage prepaid, and
addressed, in the case of the Company, to the Company's Secretary at 9677
Tradeport Drive, Orlando, Florida 32827, or if the Company should move its
principal office, to such principal office, and, in the case of the Optionee,
to the Optionee's last permanent address as shown on the Company's records,
subject to the right of either party to designate some other address at any
time hereafter in a notice satisfying the requirements of this Section.
13. Tax Consequences. Set forth below is a brief summary as of
the date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of Option. There may be a regular federal
income tax liability upon the exercise of the Option. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the fair market value of the Shares on
the date of exercise over the Exercise Price. If Optionee is an employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(b) Disposition of Shares. If Shares are held for at
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.
IN WITNESS WHEREOF, the undersigned have executed this Stock Option
Agreement as of the _____ day of ___________, 1999.
COMPANY:
WORLD COMMERCE ONLINE, INC.
By:
-----------------------------------------
Robert H. Shaw, Chief Executive Officer
and President
4
<PAGE> 5
Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option, and
fully understands all provisions of the Option.
Dated: OPTIONEE:
------------------------
By:
--------------------------------
5
<PAGE> 1
Exhibit 10.6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement dated as of this ____ day of _________,
1999 ("Agreement"), is made and entered into by and between World Commerce
Online, Inc., a Nevada corporation ("Company"), and _____________________
("Indemnitee"):
R E C I T A L S:
WHEREAS, competent and experienced persons are becoming increasingly
reluctant to serve publicly-held corporation as directors, officers, or in
other capacities unless they are provided with adequate protection through
liability insurance or adequate indemnification against inordinate risks of
claims and actions against them arising out of their service to the
corporation; and
WHEREAS, the current unavailability, inadequacy, and extraordinary
cost of adequate insurance and the uncertainties relating to indemnification
have increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the inability to attract and retain such persons is detrimental
to the best interests of the Company's shareholders and that the Company should
act to assure such person that there will be increased certainty of such
protection in the future; and
WHEREAS, Section 78.7502 of the Nevada Revised Statutes empower the
Company to indemnify its officers, directors, employees and agents by agreement
and to indemnify persons who serve, at the request of the Company, as
directors, officers, employees, or agents or other corporations or enterprises,
and Section 78.751 of the Nevada Revised Statutes expressly provides that the
indemnification provided therein is not exclusive; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such person to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, or continue to serve and to
take on additional service for or on behalf of the Company on the condition
that he be so indemnified.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Indemnitee do hereby covenant and agree as
follows:
<PAGE> 2
1. Definitions. For purposes of this Agreement:
(a) "Change of Control" shall mean a change in control of the
Company occurring after the Effective Date (as hereinafter defined) of a nature
that would be required to be reported in response to Item 1 of the Current
Report on Form 8-K (or in response to any similar item on any similar schedule
or form) promulgated under the Securities Exchange Act of 1934 (the "Act"),
whether or not the company is then subject to such reporting requirement;
provided, however, that, without limitation, such a Change of Control shall be
deemed to have occurred if, after the Effective Date: (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of at least two-thirds of the members of the Board
of Directors in office immediately prior to such person attaining such
percentage; (ii) the Company is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(including for this purpose any new director whose election or nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" shall mean the status of a person who
is or was a director, officer, employee, agent or fiduciary of the Company or
of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the request of
the Company.
(c) "Disinterested Director" shall mean a director of the
company who is not and was not a party to the Proceeding (as hereinafter
defined) in respect of which indemnification is sought by Indemnitee.
(d) "Effective Date" shall mean the date first above written.
(e) "Expenses" shall mean and include all reasonable
attorneys' fees, paralegal fees, retainers, amounts paid in settlement, court
costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
proceeding.
(f) "Independent Counsel" shall mean a law firm, or a member
of a law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such party; or (ii)
any other party to the Proceeding giving rise to a claim for
2
<PAGE> 3
indemnification hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
(g) "Proceeding" shall mean and include any action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative, whether or not initiated prior to the
Effective Date, except a proceeding initiated by an Indemnitee pursuant to
Section 11 of this Agreement to enforce his rights under this Agreement.
2. Agreement to Serve. Indemnitee agrees to serve as a director
and/or an officer of the Company. Indemnitee may at any time and for any reason
resign from such position(s) (subject to any other contractual obligation or
any obligation imposed by operation of law). The Company shall have no
obligation under this Agreement to continue Indemnitee's position with the
Company.
3. Indemnification - General. The Company shall indemnify and
advance Expenses to Indemnitee as provided in this Agreement and to the fullest
extent permitted by applicable law in effect on the date hereof and to such
greater extent as applicable law may thereafter from time to time permit. The
rights of Indemnitee provided under this Section shall include, but shall not
be limited to, the rights set forth in the other sections of this Agreement.
4. Third Party Actions. Indemnitee shall be entitled to the
rights of indemnification provided in this Section 4 if, by reason of his
Corporate Status, he is or is threatened to be made a party to any threatened,
pending or completed Proceeding, other than a Proceeding by or in the right of
the Company. Pursuant to this Section 4, Indemnitee shall be indemnified
against Expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with any
such Proceeding or any claim, issue or matter therein, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal Proceeding, had
no reasonable cause to believe his conduct was unlawful.
5. Derivative Actions. Indemnitee shall be entitled to the
rights of indemnification provided in this Section 5 if, by reason of his
Corporate Status, he is or is threatened to be made a party to any threatened,
pending or completed Proceeding brought by or in the right of the Company to
procure a judgment in its favor. Pursuant to this Section 5, Indemnitee shall
be indemnified against Expenses actually and reasonably incurred by him or on
his behalf in connection with such Proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the Company. Notwithstanding the foregoing, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in such
Proceeding as to which Indemnitee shall have been adjudged to be liable to the
Company, if applicable law prohibits such indemnification against Expenses;
provided, however, that the Company shall nevertheless indemnify Indemnitee
against such expenses in such event if
3
<PAGE> 4
and only to the extent that the Circuit Court of the State of Florida, or the
court in which such Proceeding shall have been brought or is pending, shall
determine are reasonable and necessary.
6. Indemnification for Expenses of an Indemnitee. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a party to and is successful on the merits or
otherwise in any Proceeding, he shall be indemnified against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 6, and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.
7. Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding, he shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf
in connection therewith.
8. Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within twenty (20) days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by an
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it
shall ultimately be determined that Indemnitee is not entitled to be
indemnified against such Expenses.
9. Indemnification Procedure.
(a) To obtain indemnification under this Agreement,
Indemnitee shall submit to the Secretary of the Company (or to such other
officer as may be designated by the Board of Directors) a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and as is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Secretary or other designated officer of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for
indemnification pursuant to Section 9(a) hereof, a determination with respect
to Indemnitee's entitlement thereto, if required by applicable law, shall be
made in the following specific cases: (i) if a Change of Control (as herein
defined) shall have occurred, by Independent Counsel (as herein defined)
(unless Indemnitee shall request that such determination be made by the Board
of Directors or the shareholders, in which case by the person or persons or in
the manner provided in clauses
4
<PAGE> 5
(ii) or (iii) of this Section 9(b)) in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee; (ii) if a Change
of Control shall not have occurred, (A) by the Board of Directors by a majority
vote of a quorum consisting of Disinterested Directors or (B) if a quorum of
the Board of Directors consisting of Disinterested Directors is not obtainable
or, even if obtainable, such quorum of Disinterested Directors so directs, by
Independent Counsel in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee or (C) if directed by the Directors, by
the shareholders of the Company; or (iii) as provided in Section 10(b) of this
Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to or on behalf of Indemnitee shall be made within ten
(10) days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which
is not privileged or otherwise protected from disclosure and which is
reasonably available to Indemnitee and reasonably necessary to such
determination. Any Expenses incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 9(b)
hereof, the Independent Counsel shall be selected as provided in this Section
9(c). If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within seven (7)
days after such written notice of selection shall have been given, deliver to
the Company or to Indemnitee, as the case may be, a written objection to such
selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 1 of this Agreement, and the objection shall set
forth with particularity the factual basis of such assertion. If such written
objection is made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has determined that such objection
is without merit. If, within twenty (20) days after submission by Indemnitee of
a written request for indemnification pursuant to Section 9(a) hereof, no
Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Circuit Court of the State of Florida
for the County of Orange for resolution of any objection which shall have been
made by the Company or Indemnitee of the other party's selection of Independent
Counsel and/or for the appointment of Independent Counsel of a person selected
by the court or by such other person as the court shall designate, and the
person with respect to whom an objection is so resolved or the person so
appointed shall act as Independent Counsel under Section 9(b) hereof. The
Company shall pay any and all reasonable fees and Expenses of Independent
Counsel incurred by such Independent
5
<PAGE> 6
Counsel in connection with such Independent Counsel's obligations under Section
9(b) hereof, and the Company shall pay all reasonable fees and Expenses
incident to the procedures of this Section 9(c), regardless of the manner in
which such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial Proceeding pursuant to Section 11(a) of this
Agreement, Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
10. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in
making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement if
Indemnitee has submitted a request for indemnification in accordance with
Section 9(a) of this Agreement, and the Company shall have the burden of proof
to overcome that presumption in connection with the making by any person,
persons or entity of any determination contrary to that presumption.
(b) If the person, persons or entity empowered or
selected under Section 9 of this Agreement to determine whether Indemnitee is
entitled to indemnification shall not have made a determination within sixty
(60) days after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification absent: (i) a
misstatement by Indemnitee of a material fact or an omission of a material fact
necessary to make indemnitee's statement not materially misleading in
connection with the request for indemnification; or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day
period may be extended for a reasonable time, not to exceed an additional
thirty (30) days, if the person, persons or entity making the determination
with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 10(b) shall not apply: (y) if the determination of
entitlement to indemnification is to be made by the shareholders pursuant to
Section 9(b) of this Agreement and if: (A) within fifteen (15) days after
receipt by the Company of the request for such determination the Board of
Directors has resolved to submit such determination to the shareholders for
their consideration at an annual meeting thereof to be held within seventy-five
(75) days after such receipt and such determination is made thereat; or (B) a
special meeting of shareholders is called within fifteen (15) days after such
receipt for the purpose of making such determination, such meeting is held for
such purpose within sixty (60) days after having been so called and such
determination is made thereat; or (z) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 9(b)
of this Agreement.
(c) The termination of any Proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in
6
<PAGE> 7
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his conduct
was unlawful.
11. Remedies of Indemnitee.
(a) In the event that: (i) a determination is made
pursuant to Section 9 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement; (ii) advancement of Expenses is not
timely made pursuant to Section 8 of this Agreement; (iii) the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 9(b) of this Agreement and such determination shall not have been made
and delivered in a written opinion within ninety (90) days after receipt by the
Company of the request for indemnification; (iv) payment of indemnification is
not made pursuant to Section 5 of this Agreement within ten (10) days after
receipt by the Company of a written request therefor; or (v) payment of
indemnification is not made within ten (10) days after a determination has been
made that Indemnitee is entitled to indemnification or such determination is
deemed to have been made pursuant to Sections 9 or 10 of this Agreement,
Indemnitee shall be entitled to an adjudication in an appropriate court of the
State of Florida, or in any other court of competent jurisdiction, of his
entitlement to such indemnification or advancement of expenses. Indemnitee
shall commence such proceeding seeking an adjudication within one hundred
eighty (180) days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 11(a). The Company shall not
oppose indemnitee's right to seek any such adjudication.
(b) In the event that a determination shall have been
made pursuant to Section 9 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial Proceeding commenced pursuant to this Section 11
shall be conducted in all respects as a de novo trial on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination. If
a Change of Control shall have occurred, in any judicial Proceeding commenced
pursuant to this Section 11, the Company shall have the burden of proving that
Indemnitee is not entitled to indemnification or advancement of Expenses, as
the case may be.
(c) If a determination shall have been made or deemed to
have been made pursuant to Sections 9 or 10 of this Agreement that Indemnitee
is entitled to indemnification, the Company shall be bound by such
determination in any judicial Proceeding commenced pursuant to this Section 11,
absent: (i) a misstatement by Indemnitee of a material fact or an omission of a
material fact necessary to make Indemnitees statement not materially
misleading, in connection with the request for indemnification; or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any
judicial Proceeding commenced pursuant to this Section 11 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and
shall stipulate in any such court that the Company is bound by all the
provisions of this Agreement.
7
<PAGE> 8
(e) In the event that Indemnitee, pursuant to this
Section 11, seeks a judicial adjudication to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any
and all expenses (of the types described in the definition of Expenses in
Section 1 of this Agreement) actually and reasonably incurred by him in such
judicial adjudication, but only if he prevails therein. If it shall be
determined in said judicial adjudication that Indemnitee is entitled to receive
part but not all of the indemnified action or advancement of Expenses sought,
the Expenses incurred by Indemnitee in connection with such judicial
adjudication shall be appropriately prorated.
12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the Articles of Incorporation, the Bylaws, any agreement,
a vote of shareholders or a resolution of directors, or otherwise. No
amendment, alteration or repeal of this Agreement or any provision hereof shall
be effective as to any Indemnitee with respect to any action taken or omitted
by such Indemnitee in his Corporate Status prior to such amendment, alteration
or repeal.
(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, agents or fiduciaries of the Company or of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment as all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement
to make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
(e) The Company may, to the fullest extent authorized by
law, create a trust fund, grant a security interest and/or use other means
(including, without limitation, letters of credit, surety bonds and other
similar arrangements) to ensure the payment of such amounts as may become
necessary to effect indemnification provided hereunder.
8
<PAGE> 9
13. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) ten (10) years after the date that Indemnitee
shall have ceased to serve as a director, officer, employee, agent or fiduciary
of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which Indemnitee served at the
request of the Company; or (b) the final termination of all pending Proceedings
in respect of which Indemnitee is granted rights of indemnification or
advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee
pursuant to Section 11 of this Agreement relating thereto. This Agreement shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of Indemnitee and his heirs, executors and administrators.
14. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of
any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
15. Exceptions to Indemnification Rights. Notwithstanding any
other provision of this Agreement, Indemnitee shall not be entitled to
indemnification or advancement of Expenses under this Agreement with respect to
any Proceeding, or any claim therein, brought or made by him against the
Company.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.
17. Captions. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
18. Amendment and Waiver. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver.
19. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
9
<PAGE> 10
20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given: (i) if delivered by hand and receipted for by the party to whom
said notice or other communication shall have been directed, then when so
delivered; or (ii) if mailed by certified mail, return receipt requested, with
postage prepaid, on the third business day after the date on which it is so
mailed:
(a) If to Indemnitee, to the address set forth
immediately following Indemnitee's signature hereinbelow.
(b) If to the Company, to: 9677 Tradeport Drive,
Orlando, Florida 32827. Attention: Corporate secretary.
or to such other address as may have been furnished to Indemnitee by the
Company or to the Company by Indemnitee, as the case may be.
21. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Nevada, without giving effect to the principals of conflicts of laws.
22. Gender. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement on the day and year first above written.
"COMPANY"
WORLD COMMERCE ONLINE, INC.
By:
-----------------------------------------------
Robert Shaw, Chief Executive Officer
INDEMNITEE
---------------------------------------------------
Name:
-----------------------------------------------
Address:
--------------------------------------------
---------------------------------------------------
10
<PAGE> 1
Exhibit 10.7
LEASE
AIRSIDE COMMERCE PARK
LESSOR: LANDO TRADEPORT LIMITED PARTNERSHIP
LESSEE: WORLD COMMERCE ONLINE, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1 CONSTRUCTION OF BUILDING...................................................................................1
SECTION 2 POSSESSION AND COMMENCEMENT OF TERM........................................................................2
SECTION 3 ANNUAL RENTAL..............................................................................................3
SECTION 4 ANNUAL ADJUSTMENTS TO ANNUAL RENT..........................................................................5
SECTION 5 TAXES, ASSESSMENTS AND UTILITIES...........................................................................5
SECTION 6 USE OF PREMISES............................................................................................7
SECTION 7 OPERATION AND MAINTENANCE OF COMMON AREAS..................................................................9
SECTION 8 MAINTENANCE AND REPAIRS OF LEASED PREMISES................................................................11
SECTION 9 ALTERATIONS...............................................................................................12
SECTION 10 LIENS.....................................................................................................13
SECTION 11 INSURANCE AND INDEMNIFICATION.............................................................................13
SECTION 12 DESTRUCTION OF LEASED PREMISES............................................................................15
SECTION 13 EMINENT DOMAIN............................................................................................16
SECTION 14 ASSIGNMENT AND SUBLETTING.................................................................................17
SECTION 15 ACCESS TO PREMISES........................................................................................18
SECTION 16 FIXTURES AND EQUIPMENT....................................................................................18
SECTION 17 NOTICE OR DEMANDS.........................................................................................18
SECTION 18 BANKRUPTCY................................................................................................19
SECTION 19 DEFAULT OF THE LESSEE, RE-ENTRY AND DAMAGES...............................................................20
SECTION 20 SURRENDER OF PREMISES ON TERMINATION......................................................................22
SECTION 21 OFFSET STATEMENT, SUBORDINATION AND ATTORNMENT............................................................23
SECTION 22 RULES AND REGULATIONS.....................................................................................24
SECTION 23 SECURITY DEPOSIT..........................................................................................24
SECTION 24 HOLDING OVER..............................................................................................25
SECTION 25 LESSEE'S PROPERTY.........................................................................................25
SECTION 26 DEFINITION................................................................................................26
SECTION 27 MISCELLANEOUS.............................................................................................26
SECTION 28 RELOCATION................................................................................................28
SECTION 29 LESSEE'S OPTIONAL LEASE TERMINATION RIGHT.................................................................28
</TABLE>
EXHIBIT "A"
EXHIBIT "B"
EXHIBIT "C"
EXHIBIT "D"
(i)
<PAGE> 3
LEASE
AIRSIDE COMMERCE PARK
This LEASE is made as of the 15th day of February, 1999, by and
between LANDO TRADEPORT LIMITED PARTNERSHIP, the address of which is 9427
Tradeport Drive, Orlando, Florida, 32827 as Lessor and WORLD COMMERCE ONLINE,
INC., the address of which is 9677 TRADEPORT DRIVE, ORLANDO, FLORIDA, as
Lessee.
IN CONSIDERATION OF the rents to be paid and the mutual. covenants,
promises and agreements herein set forth, Lessor and Lessee agree as follows:
Lessor hereby leases unto Lessee a portion of a building premises
situated in the City of Orlando, County of Orange, State of Florida, in a
development commonly known as AIRSIDE COMMERCE PARK, which development is shown
on the site plan marked Exhibit A attached hereto and trade a part thereof,
such Leased Premises being outlined in red thereon. The legal description of
AIRSIDE COMMERCE PARK is more particularly described on Exhibit B attached
hereto and made a part hereof.
TO HAVE AND TO HOLD for a term of four (4) years, commencing on April
1, 1999, and terminating on MARCH 31, 2003.
SECTION 1
CONSTRUCTION OF BUILDING
Section 1.01: Lessor shall deliver the leased premises in
accordance with Exhibit "D" attached hereto and made a part hereof. The leased
premises shall be deemed ready for Tenant's occupancy when Landlord shall `
have delivered the leased premises to Tenant pursuant to Exhibit "D", which
shall be deemed part of the building premises referred to above. The Leased
Premises shall consist of an exterior of approximately 21, 852 square feet, for
Bay P/front through V more or less of the south building, on one floor, more
particularly known as 9677 Tradeport Drive, Orlando, Florida. No minor change
from such plans which may be necessary during construction shall affect, change
or invalidate this Lease..
Section 1.02: The exterior portion of the exterior walls and
the roof of the Leased Premises and the area beneath said Leased Premises are
not demised hereunder, and the use together with the right to install,
maintain, use, repair and replace pipes, ducts, wires, structural elements, or
any other construction elements, leading through, over, or under the Leased
Premises in locations which will not materially interfere with the Lessee's use
hereof and serving other parts of Airside Commerce Park are hereby reserved
unto the Lessor.
<PAGE> 4
Section 1.03: Lessee shall be allocated a maximum of eighty
four (84) car spaces which spaces will not be designated but will be part of
the total spaces as shown on Exhibit "A" and in no event will Lessee, its
invitees, employees and agents be allowed collectively to use more than eighty
four (84) car spaces. A violation of this Section will give Lessor the right to
terminate this Lease.
Section 1.04: Lessor hereby reserves the right at any time,
from time to time, to make alterations or additions to, and to build additional
stories on the building in which the Leased Premises are located and to build
adjoining the same, provided such alterations or additions do not materially
adversely prevent Lessee from conducting its business with the Leased Premises.
Lessor also reserves the right at any time, and from time to time, to construct
other buildings and improvements in the development, and to build adjoining
thereto and to construct decks or elevated parking facilities and free-standing
buildings within the parking lot areas of the development or to change the
configuration including curb cuts, driveways and parking of the common areas.
The purpose of the site plan attached as Exhibit "A" is to show the approximate
location of the Leased Premises within the development. Lessor reserves the
right at any time to relocate the various buildings, parking areas and other
common areas shown on said site plan. If Lessor shall elect to modify the
development as permitted above, Lessor shall provide parking facilities as
shall be required by local ordinances.
Section 1.05: This Lease by and between Lando Tradeport
Limited Partnership as Lessor and World Commerce Online, Inc. as Lessee, dated
this date is subject to the Lease dated February 9, 1987 by and between The
Greater Orlando Aviation Authority as Lessor, and Lando Tradeport Limited
Partnership as Lessee covering the land as described in Exhibit B attached to
this Lease and Lessee, World Commerce Online, Inc., takes this Lease subject to
the Lease by and between The Greater Orlando Aviation Authority and Lando
Tradeport Limited Partnership.
SECTION 2
POSSESSION AND COMMENCEMENT OF TERM
Section 2.01: Except as otherwise provided in this Lease, the
Leased Premises shall be deemed ready for Lessee's occupancy when Lessor shall
have substantially completed construction of said Leased Premises pursuant to
the plans on Exhibit "D". By occupying the Leased Premises, Lessee will be
deemed to have accepted the Leased Premises and acknowledged that they are in
the condition called for hereunder. The rentals herein reserved and the term of
this Lease shall commence on the date when the Leased Premises are delivered to
Lessee as required hereunder. Lessor will require its contractor to cooperate
with Lessee's installers of equipment, trade fixtures, furnishings and
decorations attached to the real estate improvements to the maximum extent
possible, but delay of or interference with construction caused by such
installers shall not postpone the commencement of the term or obligation to
commence paying rent.
-2-
<PAGE> 5
Section 2.02: In the event Lessor fails to deliver the Leased
Premises on the commencement date because the Leased Premises are not then
ready for occupancy, or because the previous occupant of said Leased Premises
is holding over, or for any other cause whatsoever, Lessor shall not be liable
to Lessee for damages as a result of Lessor's delay in delivering such Leased
Premises, and Lessee shall have no right to terminate the Lease or contest the
validity of the Lease, and the commencement date of the Lease shall be
postponed until such time as the Leased Premises are ready for Lessee's
occupancy provided such postponed termination date shall occur on the last day
of a calendar month; if not, then such termination date shall be extended by an
additional period so as to fall on the last day of such calendar month in which
it would otherwise occur.
Section 2.03: Lessee acknowledges Exhibit "D", which outlines
Lessor's construction obligations. Lessee's construction requirements may
exceed Lessor's construction obligation in which event Lessee shall pay Lessor
one half of such excess amount at the time of execution of this Lease and the
balance at the time of delivery of occupancy of the Leased Premises by Lessor
to Lessee.
In the event Lessee fails to pay said amount due as specified
herein, on the dates specified, Lessee shall pay interest on the past due
amounts at the highest rate allowed by law, and Lessor shall have all rights
and remedies pursuant to this Lease as if Lessee failed to pay monthly rental.
SECTION 3
ANNUAL RENTAL
Section 3.01: Tenant shall pay to Landlord as rent for the
Leased Premises commencing with the first (1st) month of the term of this Lease
and continuing through the twelfth (12th) month of the term of the Lease the
annual sum of ONE HUNDRED NINETY SIX THOUSAND, SIX HUNDRED SIXTY EIGHT AND
00/100 DOLLARS ($196,668.00), payable in equal consecutive monthly installments
of SIXTEEN THOUSAND THREE HUNDRED EIGHTY NINE AND 00/100 DOLLARS ($16,389.00)
each, plus Florida Sales Tax; commencing with the thirteenth (13th) month of
the term of this Lease and continuing through the twenty fourth (24th) month of
the term of the Lease the annual sum of TWO HUNDRED EIGHTEEN THOUSAND, FIVE
HUNDRED TWENTY AND 00/100 DOLLARS ($218,520.00), payable in equal consecutive
monthly installments of EIGHTEEN THOUSAND TWO HUNDRED TEN AND 00/100 DOLLARS
($18,210.00) each, plus Florida Sales Tax; commencing with the twenty fifth
(25th) month of the term of this Lease and continuing through the thirty sixth
(36th) month of the term of the Lease the annual sum of TWO HUNDRED TWENTY NINE
THOUSAND, FOUR HUNDRED FORTY SIX AND 00/100 DOLLARS ($229,446.00), payable in
equal consecutive monthly installments of NINETEEN THOUSAND ONE HUNDRED TWENTY
AND 50/100 DOLLARS ($19,120.50) each, plus Florida Sales Tax; commencing with
the thirty seventh (37th) month of the term of this Lease and continuing
through the forty eighth (48th) month of the term of the Lease the annual sum
of TWO
-3-
<PAGE> 6
HUNDRED TWENTY NINE THOUSAND, FOUR HUNDRED FORTY SIX AND 00/100 DOLLARS
($229,446.00), payable in equal consecutive monthly installments of NINETEEN
THOUSAND ONE HUNDRED TWENTY AND 50/100 DOLLARS ($19,120.50) each, plus Florida
Sales Tax; all such monthly installments shall be payable in advance at the
office of the Building Manager, or such other place as Landlord may designate
in writing, plus Florida Sales Tax upon the first day of each and every month
throughout the term of this Lease without any prior demand thereafter and
without any deduction or set-offs whatsoever. If the Lease term shall commence
on a day other than the first day of a calendar month or shall end on a day
other than the last day of a calendar month, then the rental for such month
shall be prorated upon a daily basis upon a thirty (30) day calendar month.
The first month's rent in the amount of SIXTEEN THOUSAND
THREE HUNDRED EIGHTY NINE AND 00/100 DOLLARS ($16,389.00) plus Florida sales
tax, is due and payable upon execution of this lease agreement. The rental
payments shall be made by Lessee or the office of Lessor without prior demand
therefor and without any deductions or set-offs whatsoever. Provided, however,
that if the Lease term shall commence on a day other than the first day of a
calendar month or shall end on a day other than the last day of a calendar
month, then the rental for such month shall be prorated upon a daily basis
based upon a thirty (30) day calendar month.
Any installment of rent accruing hereunder and any other sum
payable hereunder by the Tenant to the Landlord not paid when due, shall bear
interest at the highest rate allowed by law per annum from the date when the
same shall respectively become payable until the same shall be paid, and time
is of the essence of this agreement.
Any and all other sums of money or charges required to be
paid by the Tenant under this Lease shall be deemed to be additional rent
payable when due and without any deductions or setoffs whatsoever and shall be
payable to Landlord at the place where the monthly rental is payable. Tenant's
failure to pay any such amounts or charges when due shall carry with it the
same consequences as Tenant's failure to pay monthly rent.
Section 3.02: Lessor and Lessee intend that the Annual Rental
shall be net to Lessor, so that this Lease shall yield, net to Lessor, not less
than the minimum net annual rental specified in, Section 3.01 hereof during the
term of this Lease, and that all costs, expenses and charges of every kind and
nature relating to the demised premises which may be attributable to, or become
due during the term of this Lease shall be paid by Lessee and that Lessor shall
be indemnified and saved harmless by Lessee from and against the same.
Provided, however, that if the Lease term shall commence on a day other than
the first day of a calendar month or shall end. on a day other than the last
day of a calendar month, then the rental for such month shall be prorated upon
a daily basis based upon a thirty (30) day calendar month.
Section 3.03: Rent shall be defined in this Lease as Annual
Rental and additional rental, which sums shall be payable in the manner
provided in this Lease. All other sums of money or charges required to be paid
by Lessee under this Lease or in the Exhibits attached hereto shall be due and
payable ten (10) days after written demand, unless otherwise provided
-4-
<PAGE> 7
herein, without any deductions. or set-offs whatsoever and shall be treated as
rent for the purpose of this Lease. Lessee's failure to pay any such amounts or
charges when due shall carry with it the same consequences under this Lease as
Lessee's failure to pay monthly rental. All such amounts or charges shall be
payable to Lessor at the place where the fixed monthly rental is payable.
SECTION 4
ANNUAL ADJUSTMENTS TO ANNUAL RENT
[This section has been deleted in its entirety.]
SECTION 5
TAXES, ASSESSMENTS AND UTILITIES
Section 5.01: Lessee agrees to pay to Lessor its
proportionate share of all taxes and assessments which have been or may be
levied or assessed by any lawful authority, for any calendar year during the
term hereof against the land and buildings presently and/or at any time during
the term of this Lease comprising AIRSIDE COMMERCE PARK. Lessee further agrees
to pay its proportionate share of an "amount in lieu of taxes" or an
"additional amount in lieu of taxes" as may be assessed to or on Lessor or on
its land or its improvements, in the event Lessor's, or Lessee's leasehold
interest, or Lessor's or Lessee's leasehold improvements are not subject to the
City of Orlando ad valorem tax levy. Lessee's proportionate share shall be
equal. to the product obtained by multiplying such taxes and assessments by a
fraction, the numerator of which shall be the number of square feet of floor
area in the Leased Premises, and the denominator of which shall be the total
number of square feet of net constructed leasable floor area in Airside
Commerce Park, plus fifteen percent (15%) administration fee. Any tax and/or
assessment or payment in lieu thereof of any kind or nature presently or
hereafter imposed by the State of Florida or any political subdivision thereof
or any governmental authority having jurisdiction thereover, upon, against or
with respect to the rentals payable by tenants in Airside Commerce Park or with
respect to the Lessor's, or the individuals' or entities' which form the Lessor
herein, ownership of the land and buildings presently and/or at any time during
the term of the Lease comprising the AIRSIDE COMMERCE PARK, or on the receipt
by Lessor of any payments from Lessee, or on the income of Lessor derived from
Airside Commerce Park either by way of substitution for all or any part of the
taxes and assessments levied or assessed against such land and such buildings,
or in addition thereto, or any other tax or assessment assessed by any proper
taxing authority on Lessor's leasehold interest or on any improvements on such
leasehold interest, shall be deemed to constitute a tax and/or assessment
against such land and such buildings for the purpose of this Section and Lessee
shall be obligated to pay its proportionate share thereof as provided herein.
In addition, Lessee shall also be obligated to pay any sales tax or any other
tax imposed by any governmental authority on the payment by Lessee or on the
receipt by Lessor of any and all payments from Lessee. If the sales tax or any
other tax
-5-
<PAGE> 8
is separately assessed, then Lessee shall pay that amount imposed on the
individual payments of Lessee, if the sales tax or any other tax is not
separately assessed, the Lessee shall pay its proportionate share monthly as
provided-herein. All costs and expenses incurred by Lessor in connection with
negotiations for, or contests, (including litigation) of the amount of the
taxes shall be included within the term taxes.
Section 5.02: Lessee's share of all of the aforesaid taxes
and assessments levied or assessed for or during the term hereof, as determined
by Lessor, shall be paid in monthly installments on or before the first day of
each calendar month, in advance, in an amount estimated by Lessor; provided,
that in the event Lessor is required under any mortgage covering the land and
improvements leased to Lessee to escrow real estate taxes, Lessor may, but
shall not be obligated to, use the amount required to be so escrowed as a basis
for its estimate of the monthly installments due from Lessee hereunder. Upon
receipt of all tax bills and assessment bills attributable to any calendar year
during the term hereof, Lessor shall furnish Lessee with a written statement
of the actual amount of Lessee's share of the taxes and assessments for such
year. In the event no tax bill is available, Lessor will compute the amount of
such tax. If the total amount paid by Lessee under this Section for any
calendar year during the term of this Lease shall be less than the actual
amount due from Lessee for such year, as shown on such statement, Lessee shall
pay to Lessor the difference between the amount paid by Lessee and the actual
amount due, such deficiency to be paid within ten (10) days after demand
therefor by Lessor; and if the total amount paid by Lessee hereunder for any
such calendar year shall exceed such actual amount due from Lessee for such
calendar year, such excess shall be credited against the next installment of
taxes and assessments due from Lessee to Lessor hereunder. All amounts due
hereunder shall be payable to Lessor at the place where the monthly rental is
payable. For the calendar years in which this Lease commences and terminates,
the provisions of this Section shall apply, and Lessee's liability for its
proportionate share of any taxes and assessments for such years shall be
subject to a pro rata adjustment based on the number of days of said calendar
years during which the term of this Lease is in effect. A copy of a tax bill or
assessment bill submitted by Lessor to Lessee shall at all times be sufficient
evidence of the amount of tax and/or assessments assessed or levied `against
the property to which such bill relates. Prior to or at the commencement of the
term of this Lease and from time to time thereafter throughout the term hereof,
Lessor shall notify Lessee in writing of Lessor's estimate of Lessee's monthly
installments due hereunder. Lessor's and Lessee's obligations under this
Section shall survive the expiration of the term of this Lease.
Notwithstanding anything in this Section 5 to the contrary,
all costs and expenses incurred by Lessor in connection with negotiations for,
or contests (including litigation) of, the amount of the Taxes shall be
included within the term "Taxes". In the event a refund is obtained, Lessor
shall credit a portion thereof to "the next installment of taxes due from
Tenant in proportion to the share of such Taxes originally paid by Tenant from
which the refund was derived.
In addition to the foregoing, Tenant at all times shall be
responsible for and shall pay, before delinquency, all taxes levied, assessed
or unpaid on any leasehold interest, any right of occupancy, any investment of
Tenant in the Leased Premises, or any personal property of any
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kind owned, installed or used by Tenant, including Tenant's leasehold
improvements or on Tenant's right to occupy the Leased Premises.
Section 5.03: Lessee shall be solely responsible for and
shall promptly pay all charges for utility services (including but not limited
to water, gas, heat, electricity, telephone and sewer), furnished to or
consumed at the Leased Premises. If Lessor shall elect to supply any utility
services to the Leased Premises, Lessor shall charge Lessee for such utility
services at the applicable rates filed by Lessor with the proper regulatory
authorities and in effect from time to time covering such services, but no more
than the rates which would be charged by the local utility company. Payment for
any and all utility services used by Lessee shall be made within ten (10) days
of the presentation of bills therefor. Lessor shall have the right to cut off
and discontinue, without notice to Lessee, utility services or any other
service whenever and during any period for which bills for the same or for rent
or other obligations are not promptly paid by Lessee. The obligation of Lessee
to pay for all such utility services shall commence at the date of delivery of
possession of the Leased Premises to Lessee. Lessor shall not be liable in
damages or otherwise, should the furnishing of any services by it to the Leased
Premises be interrupted for any reason not attributable to the gross, willful
or wanton negligence of Lessor.
Section 5.04: In the event any or all of the foregoing
utilities are to be paid from an escrow fund required to be established by
Lessor or its financial institution under the terms of any financing, the
Lessor shall notify Lessee and Lessee shall be required to include with the
additional monthly payments referred to in Section 5.02 a monthly amount to
satisfy the estimated monthly utility costs. If the utilities, when due, exceed
the total amount then in the utility escrow, then the Lessee shall, upon
demand, pay any deficiency to Lessor. If such payments by Lessee, over the term
of the Lease, exceed the amount of utilities paid from the escrow, such excess
shall be refunded by Lessor to Lessee at the expiration of the Lease Term, or
when such excess is refunded by the financial institution to Lessor, whichever
first occurs. The utility escrow shall be adjusted as often as necessary to
provide sufficient funds to pay current utilities.
SECTION 6
USE OF PREMISES
Section 6.01: It is understood and agreed between the parties
that the Leased Premises during the continuance of this Lease shall be used and
occupied for office use only and for no other purpose whatsoever without the
prior written consent of Lessor. Lessee agrees that it will not use or permit
any person to use the Leased Premises or any part thereof for any use or
purpose in violation of the laws of the United States, the State of Florida,
County of Orange, the ordinances or other regulations of the City of Orlando,
the Greater Orlando Aviation Authority (GOAA) or of any other lawful
authorities. Lessee expressly agrees, on behalf of itself and its successors
and assigns, to prevent any use of the Leased Premises and any leasehold
improvements which would interfere with or adversely affect the operations or
maintenance of the Greater Orlando Airport (Airport) or which would otherwise
constitute a hazard at the
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Airport. Lessee expressly acknowledges the right of flight of aircraft through
the airspace above the surface of the Leased Premises together with such noise
as may be inherent in the operation of aircraft now known or hereafter used for
navigation of or flight in said airspace and the use of said airspace for
landing on, taking off from or operating from the Airport. During the term of
this Lease, the Lessee will keep the Leased Premises and every part thereof and
the area adjacent to the Leased Premises (including service areas), orderly,
neat, safe and clean and free from rubbish and dirt and at all times shall store
all trash, garbage or any other material solely within the Leased Premises and
arrange for the regular pickup of such trash and garbage at Lessee's expense.
Lessee shall not burn any trash or garbage at any time in or about the Leased
Premises or the building or the development. If Lessor shall provide any
services or facilities for such pickup, then Lessee shall be obligated to use
the same and shall pay a proportionate share of the actual cost thereof within
ten (10) days after being billed therefor. Lessee shall not store or leave any
material outside of the Leased Premises or the building or the development at
any time. Lessee shall not commit or suffer to be committed any waste upon the
leased Premises or any nuisance or other act or thing which may disturb the
quiet enjoyment of any other Lessee or occupant in the building on which the
Leased Premises may be located or any other part of the development. Lessee
shall not use or permit to be used, any medium that might constitute a nuisance
such as loud speakers, sound amplifiers, phonographs, radios, televisions, or
any other sound producing device which will carry sound outside the Leased
Premises. All signs and advertising displayed in and about the Leased Premises
shall be such only as to advertise the business carried on upon the Leased
Premises and Lessor shall control the location, character and size thereof. No
signs shall be displayed except as approved in writing by the Lessor and as a
condition of Lessor's approval, the sign must conform to the Lessor's sign
criteria; and no awning shall be installed or used on the exterior of said
building unless approved in writing by the Lessor.
Upon the breach of the use of the premises, Lessor shall have
the right to terminate this Lease forthwith and to re-enter and repossess the
Leased Premises.
Section 6.02: Lessee, for itself, its successors in interest
and its assigns, as part of the consideration hereof, does hereby covenant and
agree as a covenant running with this Lease, that (1) no person on the grounds
of race, color or national origin shall be excluded from participation in,
denied the benefits of, or be otherwise suspect to discrimination in the
construction of any improvements, on, over or under the Leased Premises, and (2)
the furnishing of services thereon, or be excluded from participating in, denied
the benefits of, or be otherwise subject to discriminations in the use of the
Leased Premises or any leasehold improvements at the Airport.
Lessee shall use the Leased Premises and the leasehold
improvements in compliance with the laws of the State of Florida prohibiting
discrimination because of sex, religion, age or physical handicap and in
compliance with all other requirements imposed pursuant to Title 49, Code of
Federal Regulation, Part 21 of the Civil Rights Act of 1964 as such laws and
regulations may be amended from time to time.
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In the event of breach of any of the above nondiscrimination
covenants, Lessor shall have the right to terminate this Lease and to re-enter
and repossesses said Leased Premises and the leasehold improvements, and to hold
the same as if this Lease had never been made or issued. The right granted to
Lessor by the foregoing sentence shall not be effective until all applicable
procedures of Title 49, Code of Federal Regulations, Part 21, or the State of
Florida laws are followed land completed including expiration of appeal rights.
Section 6.03: Lessee shall not cause or create any hazardous
condition on the Leased Premises, the building, the development or the adjoining
property and Lessee shall comply with all applicable laws and regulations
relating to said hazardous substances and will take all appropriate action to
prevent the release of a hazardous substance. Hazardous substance as used herein
shall be as defined in 42 & 49. U.S.C. Sections 9601., et seq., and in the
regulations adopted and publications promulgated pursuant thereto, or any other
Federal, state or local governmental law, ordinance, rule or regulation. . In
the event of a release of hazardous substances by Lessee, its employees, agents
or. contractors, the Lessee shall indemnify and hold harmless the Lessor and its
mortgagee from all claims or liability that might arise from the release of
hazardous substances. such indemnification shall include all damage costs,
expenses, attorneys' fees, or other expenses which Lessor may incur.
SECTION 7
OPERATION AND MAINTENANCE OF COMMON AREAS
Section 7.01: Lessor agrees, at Lessor's sole cost and
expense, to construct building(s) on the site of Airside Commerce Park, and to
hard surface, drain, landscape and light a parking area or parking areas all
substantially as shown on Exhibit "A", which parking area or parking areas shall
have a minimum capacity for 250 passenger automobiles. Lessor further agrees to
cause to be operated, managed and maintained during the term of this Lease all
parking areas, roads, sidewalks, landscaping, drainage, and common area lighting
facilities in Airside Commerce Park all as hereinafter defined as "Common
Areas". The manner in which such areas and facilities shall be maintained and
operated and the expenditures therefor shall be at the sole discretion of the
Lessor and the use of such areas and facilities, Common Areas, shall be subject
to such reasonable regulations as Lessor shall make from time to time.
Section 7.02: The term "Common Areas", as used in this Lease
shall mean and include (but is not limited to): all parking areas; driveways,
roadways and access roads; truckways; pedestrian sidewalks; loading docks and
service areas (but excluding such loading docks and service areas provided for
the exclusive use of single Lessees): bermed and/or landscaped and/or planted
areas, planter boxes, and retaining walls; courts and ramps; public restrooms
and comfort stations; exterior lighting facilities; public and traffic control
signage; traffic signals outside of the development which are maintained by the
development; utility systems and facilities used for the development, including
storm water and/or sanitary sewer collection and retention facilities,
flashing, gutters and downspouts; fascia and canopy; maintenance and
administrative facilities; and all other areas and improvements which may be
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provided by the Lessor for the general convenience or use in common of the
Lessee's of AIRSIDE COMMERCE PARK and their employees, customers and invitees,
and any utilities provided more than one Lessee in the development.
Lessor hereby grants to Lessee and Lessee's employees,
agents, customers and invitees the right, during the term of this Lease, to
use, in common with all others to whom Lessor has granted or may hereafter
grant rights to use the same, the Common Areas within the limits of the
development for their intended and normal purposes; subject, however, to
reasonable rules and regulations for the use thereof as may be prescribed from
time to time by the Lessor. Lessor may at any time close temporarily any Common
Area to make repairs or changes, to prevent the acquisition of public rights in
such area or to discourage non-customer parking; and may do such other acts in
and to the Common Areas as in its judgment may be desirable to improve the
convenience thereof.
Section 7.03: Lessee agrees to pay to Lessor, in the manner
hereinafter provided, Lessee's proportionate share of all costs and expenses of
every kind and nature paid or incurred by Lessor in operating, equipping,
policing and protecting, lighting, heating, insuring, repairing, replacing and
maintaining the Common Areas of Airside Commerce Park including the cost of
insuring all property provided by Lessor which may at any time comprise the
development. Such costs and expenses shall include, but not be limited to:
illumination and maintenance of development signs, whether located on or off
the development site; cleaning (including windows), lighting and other
utilities, line painting and landscaping; premiums for liability and property
insurance; personal property taxes; policing and security services; supplies;
holiday decorations; pest control; music and intercom systems; reasonable
depreciation (but not original cost) of equipment used in the operation or
maintenance of the Common Areas; total compensation and benefits (including
premiums and contributions for workers' compensation and other employment
related benefits and costs) paid to or in connection with employees involved in
performance of the work described in this Section 7.03; and an amount equal to
fifteen (15%) percent of the total of all of the foregoing costs and expenses
to cover Lessor's administrative costs. The proportionate share to be paid by
lessee shall be equal to the product obtained by multiplying the total of such
costs and expenses by a fraction, the numerator of which is the number of
square feet of floor area of the Leased Premises, and the denominator of which
is the total number of square feet of net constructed leasable floor area in
the buildings in Airside Commerce Park.
Lessee's proportionate share of such costs and expenses for
the first (1st) year shall be paid in monthly installments on the first day of
each calendar month, in advance, in an amount of THREE THOUSAND FOUR HUNDRED
AND 00/100 DOLLARS ($3,400.00), plus Florida Sales Tax; subject to annual
adjustments every twelve months thereafter based upon anticipated annual costs
for the appropriate year. . Lessor shall furnish Lessee with a statement of
Lessee's proportionate share of the actual amount of such costs and expenses
for each Lease Year. If the amount paid by-Lessee under this Section for any
Lease Year shall be less than the actual amount due from Lessee for such Lease
Year as shown on such statement, Lessee shall pay to Lessor such deficiency
within ten (10) days after the furnishing of such statement, and if the amount
paid by Lessee under this Section for any such Lease Year shall exceed such
actual
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amount due from Lessee for such Lease Year, such excess shall be credited
against the next installment due under this Section 7.03, or upon the
expiration of the term of the Lease such excess shall be refunded to Lessee.
SECTION 8
MAINTENANCE AND REPAIRS OF LEASED PREMISES
Section 8.01: Lessor shall keep and maintain the foundation,
exterior walls and roof of the building in which the Leased Premises are located
and the structural portions of the Leased Premises which were originally
installed by Lessor; exclusive of doors, door frames, door checks, windows,
window frames, located as part of the exterior building walls, in good repair
except that Lessor shall not be called upon to make any such repairs occasioned
by the act or negligence of Lessee, its agents, employees, invitees, licensees
or contractors, or attributable to any intentional act, alteration, addition or
improvement performed by or under the direction of the Lessee, its agents, its
contractors, or its employees. Lessor shall not be called upon to make any other
improvements or repairs of any kind upon said premises and appurtenances, except
as may be required under Section 12 and 13 hereof. Lessee shall promptly notify
Lessor, in writing, of the need for any repairs which are the responsibility of
Lessor to perform.
Section 8.02: Except as provided in Section 8.01 of this Lease, Lessee shall
keep and maintain in good order, condition and repair (including replacement of
parts and equipment, if necessary) the Leased Premises and every part thereof
and any and all appurtenances thereto wherever located, including but without
limitation, the exterior and interior portion of all doors, door checks,
windows, plate windows, store front, all plumbing and sewage facilities within
the Leased Premises, including free flow up to the main sewer, fixtures, heating
and air-conditioning (including keeping a quarterly maintenance agreement on all
air conditioning units) and electrical systems (whether or not located in the
Leased Premises), sprinkler system, walls, floors and ceilings. The plumbing and
sewage facilities shall not be used for any other purpose than that for which
they are constructed, and no foreign substance of any kind shall be introduced
therein. Lessee hereby agrees to be responsible for any expenses incurred in
connection with any breakage, stoppage or damage resulting from a violation of
this provision by Lessee, its agents, employees, invitees, licensees or
contractors.
Lessee shall keep and maintain the Leased Premises in a
clean, sanitary and safe condition in accordance with the laws of the State of
Florida, City of Orlando, County of Orange and GOAA, and in accordance with all
directions, rules and regulations of the health officer, fire marshal, building
inspector, insurance carrier or insurance underwriter, or other proper
officials of the governmental agencies having jurisdiction, at the sole cost
and expense of Lessee, and Lessee shall comply with all requirements of laws,
ordinances and otherwise, affecting said Leased Premises. If Lessee refuses or
neglects to commence or complete repairs required by Section 8.02 hereof
promptly and adequately, Lessor may but shall not be required to do so, make
all or any part of said repairs and Lessee shall pay the costs thereof to
Lessor upon demand, non-payment of which shall entitle Lessor to exercise any
remedy available to it in the event of
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the non-payment by Lessee of monthly rental or any charge due Lessor under this
Lease. At the time of the lease termination or expiration of the tenancy
created herein, Lessee shall surrender the premises in good condition,
reasonable wear and tear, excepted; and Lessee shall provide Lessor with a
Phase I Environmental Report by a licensed environmental engineer certifying
that during the term of this Lease, no hazardous material or hazardous
condition existed or was created within the Leased Premises, the Common Areas
and the property related thereto attributable to any act or failure to act by
Tenant, its employees, agents, contractors, invitees or anyone else occupying
all or any portion of the Leased Premises during the term of this Lease.
Lessee, at its own expense, shall install and maintain fire
extinguishers and other fire protection devices as may be required from time to
time by any agency having jurisdiction thereof and the insurance underwriters
insuring the building in which the Leased Premises are located.
Section 8.03: All damages or injury done to the premises by
the Lessee, or by any person who may be in or upon the Leased Premises with the
consent, invitation or license of the Lessee, shall be repaired and paid for by
the Lessee.
Section 8.04: To the extent any repair which is a Lessor's
obligation is covered by insurance, Lessor shall only be obligated for the cost
of the repair to the extent of the available insurance proceeds and Lessee
shall be responsible for the cost of the repair to the extent of the cost of
such repair not covered by the insurance proceeds.
SECTION 9
ALTERATIONS
Section 9.01: Lessee agrees that the Leased Premises shall
not be altered, improved, or changed without the written consent of Lessor, and
that unless otherwise provided by written agreement, all alterations,
improvements and changes which may be desired by the Lessee and so consented
to by the Lessor may be done either by or under the direction of the Lessor, at
Lessor's option, but, in any event, at the sole cost of Lessee including the
cost of all permits and approvals related to said alterations or improvements
and subject further to any requirements or conditions imposed by GOAA.
In addition to the foregoing, Lessee further agrees to
furnish to Lessor drawings, plans and specifications for any improvements which
Lessee intends to make to the Leased Premises; which shall be subject to
Lessor's prior written approval and approval of the appropriate Municipal
agencies and GOAA. No deviation from the final set of plans and specifications,
once approved by Lessor, shall be made by Lessee, without Lessor's prior
written consent. Approval of plans and specifications by Lessor shall not
constitute the assumption of any responsibility by Lessor for their accuracy or
sufficiency, and Lessee shall be solely responsible for such matters.
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SECTION 10
LIENS
Section 10.01: Lessee shall keep the Leased Premises free
from any and all liens arising out of any work performed, materials furnished
or obligations incurred by or for Lessee, and agrees to bond against or
discharge any mechanic's lien within ten (10) days after written request
therefor by Lessor. Lessee shall reimburse Lessor for any and all costs and
expenses which may be incurred by Lessor by reason of the filing of any such
liens and/or the removal of same, such reimbursement to be made within ten (10)
days after receipt by Lessee from Lessor of a statement setting forth the
amount of such costs and expenses. The failure of Lessee to pay any such amount
to Lessor within said ten (10) day period shall carry with it the same
consequences as failure to pay any installment of monthly rental.
SECTION 11
INSURANCE AND INDEMNIFICATION
Section 11.01: Lessor shall be indemnified, defended and held
harmless by Lessee from and against any and all claims, actions, damages,
liability and expense, including attorneys' fees, in connection with loss of
life, personal injury and/or damage to property arising from or out of; (i) any
occurrence in, upon or at the Leased Premises or the service corridors
adjoining the same or the loading platform area or service areas allocated to
the use of Lessee, including the person and property of Lessee and its
employees and all persons in the building at its or their invitation or with
their consent; (ii) the occupancy or use by Lessee of the Leased Premises or
any part thereof; or (iii) occasioned wholly or in part by any act or omission
of Lessee, its agents, contractors, employees, servants, customers or
licensees. All property kept, stored or maintained in the Leased Premises or at
the building shall by so kept, stored or maintained at the risk of Lessee only.
Section 11.02: Lessee shall, during the entire term of this
Lease, keep in full force and effect a policy of public liability and property
damage insurance with respect to the Leased Premises and the business operated
by Lessee and any subtenants of Lessee in the Leased Premises, in which the
limits of public liability shall be not less than Two Million Dollars
($2,000,000.00) per occurrence, and in which the limit of property damage
liability shall be not less than Five Hundred Thousand Dollars ($500,000.00).
The policy shall name Lessor, any other parties in interest designated by
Lessor, and Lessee as insured, and shall contain a clause that the insurer will
not cancel or change the insurance without first giving the Lessor thirty (30)
days prior written notice. Such insurance may be furnished by Lessee under any
blanket policy carried by it or under a separate policy therefor. The insurance
shall be with an insurance company approved by Lessor and a copy of the paid-up
policy evidencing such insurance or a certificate of the insurer certifying to
the issuance of such policy shall be delivered to Lessor prior to the
commencement of the terms of this Lease, and upon renewals not less than thirty
(30)
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days prior to the expiration of such coverage. If the nature of Lessee's use or
business operations on the Leased Premises are such as to place any or all of
its employees under the coverage of local workers' compensation or similar
statutes, Lessee shall also keep, in force, at its expense, so long as this
Lease remains in effect, workers' compensation or similar insurance affording
the required statutory coverage and containing the requisite statutory limits.
If Lessee shall not comply with requirements of this Section 11.02, Lessor
shall have the right, but not the obligation, to cause such insurance as
aforesaid to be issued, and in such event Lessee shall pay the premium for such
insurance as additional rental within ten (10) days of invoice by Lessor.
Section 11.03: (a) During the term of this Lease, Lessor
shall carry fire and extended coverage insurance on the standard form available
in the State of Florida, and at Lessor's option may carry broader coverages
including, but not limited to, boiler and machinery insurance and/or difference
in conditions insurance, and/or all risk, insuring the development, the Common
Areas and the Leased Premises, including the portion of the Leased Premises
constructed or furnished by Lessee, provided with respect to items constructed
or furnished by Lessee, the same were constructed or furnished pursuant to the
requirement of Exhibit "D", and are reflected in the plans and specifications
submitted by Lessee, or with respect to alterations made by Lessee are
reflected in plans and specifications furnished by Lessee to Lessor, and
approved by Lessor, pursuant to Section 9.01 hereof. Lessor shall have no
obligation to insure any items which have been furnished by Lessee which
Lessee has the right to remove from the Leased Premises at the expiration or
the earlier termination of the term hereof or which are not permanently affixed
or otherwise attached to the building of which the Leased Premises are a part.
Included within such latter items are trade fixtures, furniture, decorative
lighting (such as chandeliers) and other decor items. Lessee, at Lessor's
request will furnish Lessor with the replacement cost of items furnished by
Lessee which Lessor is required to insure. Lessor shall have no liability to
Lessee for any failure to insure items provided by Lessee for amounts in excess
of the replacement cost furnished by Lessee to Lessor. All such insurance shall
be procured and maintained on a replacement cost basis, if available, in an
amount determined solely by Lessor and with or without deductible, at the
option of Lessor.
Lessor may, at its option, carry rental interruption
insurance with respect to the development in an amount equal to the aggregate
rent, and estimated cost for taxes, insurance premiums, and Common Area costs,
payable by all tenants in the development for up to a full eighteen (18) month
period.
Lessee shall not carry any stock of goods or do anything in
or about the Leased Premises which will in any way tend to increase the
insurance rates on said premises and/or the building of which they are a part.
If Lessee installs any electrical equipment that overloads the lines in the
Premises, Lessee shall at its own expense make whatever changes are necessary
to comply with the requirements of the insurance underwriters and governmental
authorities having jurisdiction.
Section 11.04: Lessee shall pay to Lessor, within ten (10)
days after billing therefor, Lessee's proportionate share of the entire cost of
insurance carried by Lessor pursuant to Sections 11.03 (a) and (b) hereof and
Lessor's primary general liability and excess liability
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insurance covering the development, plus an amount equal to fifteen percent
(15%) thereof to cover Lessor's administrative costs. Lessee's proportionate
share shall be equal to the product obtained by multiplying the total
insurance cost by a fraction, the numerator of which is the number of square
feet of floor area of the Leased Premises, and the denominator of which is the
total number of net constructed leasable floor area of buildings in the Airside
Commerce Park covered by such insurance.
Lessor at Lessor's option may require Lessee's proportionate
share of such insurance cost for each Lease Year to be paid on a monthly
estimated basis in advance at the same times and in the same manner as provided
in Section 7.03 with respect to Common Areas costs. Insurance costs shall be
deemed to be applicable to the Lease Year within which the premium is first due
and payable without regard to the policy year.
Section 11.05: To the extent of any casualty which Lessor is
required to repair which is not reimbursed from the insurance proceeds because
of the deductible amount under the insurance carried by Lessor, Lessee shall
pay its pro rata share of such deductible amount within thirty (30) days of
invoice based on the proportion of the floor area of the Leased Premises
damaged by such casualty to the total of the net constructed leasable floor
area of all leasable premises damaged by such casualty.
Section 11.06: Each party hereto does hereby remise, release
and discharge the other party hereto and any officer, agent, employee or
representative of such party, of and from any liability whatsoever hereafter
arising from loss, damage or injury caused by fire or other casualty for which
insurance (permitting waiver of liability and containing a waiver of
subrogation) is carried by the injured party at the time of such loss, damage
or injury to the extent of any recovery by the injured party under such
insurance.
SECTION 12
DESTRUCTION OF LEASED PREMISES
Section 12.01: In the event the Leased Premises shall be
damaged or destroyed by fire or other casualty covered by the insurance which
Lessor is required to carry or in fact carries pursuant to Section 11.03 (a),
so as to become partially or totally untenantable, the damage to the Leased
Premises shall be promptly repaired by Lessor, to the extent of the proceeds
received from such insurance and made available for such restoration, unless
Lessor shall elect not to rebuild as provided in Section 12.02, and the Annual
Rental as defined in Section 3 shall abate in proportion to the amount of the
Leased Premises rendered untenantable until so repaired; provided, however that
Lessor's obligation for restoration shall be limited to those items which
Lessor is required to insure as provided in Section 11.03 (a). Lessor shall
reconstruct the Leased Premises in accordance with the initial plans and
alterations thereafter approved by Lessor as provided in this Lease. In no
event shall Lessor be required to repair or replace Lessee's merchandise, trade
fixtures, furnishings or equipment. If Lessor is required, or elects, to repair
or rebuild the Leased Premises as herein provided, then Lessee shall promptly
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repair or replace its merchandise, trade fixtures, furnishings and equipment to
at least a condition equal to that prior to such damage or destruction, and
re-open in the Leased Premises.
Section 12.02: If at any time during the term of this Lease
more than twenty percent (20%) of the square foot floor area of the Leased
Premises shall be damaged by fire or other casualty, so as to become
untenantable, the Lessor may terminate this Lease upon written notice given to
Lessee within ninety (90) days after the occurrence of such damage or
destruction.
If at any time during the term of this Lease more than twenty
percent (20%) of the square foot floor area of the building in which the Leased
Premises are located, or more than twenty percent (20%) of the total buildings
of the development shall be damaged by fire or other casualty, then Lessor may
terminate this Lease upon written notice given to Lessee within ninety (90)
days after the occurrence of such damage or destruction.
SECTION 13
EMINENT DOMAIN
Section 13.01: If the whole of the Leased Premises shall be
taken by any public authority under the power of eminent domain, then the term
of this Lease shall cease as of the day Lessee is divested of physical
possession by such public authority and the rent shall be paid up to that day
with a proportionate refund by Lessor of such rent as may have been paid in
advance for a period subsequent to such termination of the term.
Section 13.02: If less than the whole but more than twenty
percent (20%) of the Leased Premises are taken under the power of eminent
domain, Lessee shall have the right to terminate this Lease effective upon the
day possession of the Leased Premises shall be required for public use. Such
notice shall be given within thirty (30) days after Lessee has received written
notice of such taking for public use.
Section 13.03: If less than the whole but more than: (i)
twenty percent (20%) of the Common Areas, or (ii) twenty percent (20%) of the
building in which the Leased Premises are located or (iii) twenty (20%) percent
of the Leased Premises, or (iv) twenty (20%) percent of the total buildings of
the development, are taken under the power of eminent domain, Lessor shall have
the right to terminate this Lease upon thirty (30) days' prior notice to
Lessee, which termination shall be effective upon the date set forth in such
notice.
Section 13.04: In the event that neither party hereto has
the right to, or elects to, terminate this Lease, Lessor shall, at its own cost
and expense, to the extent of the condemnations proceeds made available to
Lessor, make all necessary repairs and alterations to the basic buildings as
originally constructed by Lessor, so as to constitute the remaining premises a
complete architectural unit, and Lessee shall, at Lessee's sole cost and
expense repair and restore its merchandise, trade fixtures, furnishings, and
equipment. In the event this Lease shall
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not be terminated, all of the terms herein provided shall continue in effect,
except that the Annual Rental shall be reduced in proportion to the amount of
the Leased Premises taken.
Section 13.05: All damages awarded for such taking under
power of eminent domain, for the whole or a part of the Leased Premises, shall
belong to and be the property of Lessor whether such damages shall be awarded
as compensation for diminution in value to the leasehold or to the fee of the
premises; provided, however, that Lessor shall not be entitled to the award
made to Lessee for depreciation to, and cost of removal of, stock and fixtures,
or for relocation expenses.
Section 13.06: In the event the rights and privileges
hereunder are suspended by reason of war or other national emergency, rent and
all other monetary obligations under this Lease shall not abate, and Lessee
shall have the right to make any claim against the third party permitted by law
and to receive any award paid with respect to such claim.
SECTION 14
ASSIGNMENT AND SUBLETTING
Section 14.01: Lessee shall not assign or in any manner
transfer or hypothecate this Lease or any estate or interest therein without
the prior written consent of Lessor and shall not sublet the Leased Premises
or any part or parts thereof, or allow anyone to come in with, through or under
it (as concessionaire, licensee or otherwise), without like consent. Consent by
Lessor to one or more assignments) of this Lease or to one or more
subletting(s) of said premises shall not operate to exhaust Lessor's rights
under this section. In the event that Lessee, with or without the previous
consent of Lessor, does assign or in any manner transfer this Lease or any
estate or interest therein, Lessee shall in no way be released from any of its
obligations under this Lease. The sale or sales totaling fifty percent (50%) or
more of the capital stock of Lessee or any guarantor of Lessee's obligations
hereunder. (if Lessee or such guarantor is a corporation), or the sale or
sales aggregating fifty percent (50%) or more of the partnership interests in
Lessee or such guarantor (if Lessee or such guarantor be a partnership),
shall be deemed to be an assignment of this Lease for purposes of the Section.
SECTION 15
ACCESS TO PREMISES
Section 15.01: Lessor and Lessor's agents shall have the
right to enter upon the Leased Premises at all reasonable hours for the purpose
of inspecting the same, or of making repairs, additions or alterations to the
Leased Premises or any property owned or controlled by Lessor.
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If Lessor deems any repairs required to be made by Lessee
necessary, it may demand that Lessee make the same forthwith and if Lessee
refuses or neglects to commence such repairs and complete the same with
reasonable dispatch, Lessor may make or cause such repairs to be made and shall
not be responsible to Lessee for any loss or damage that may accrue to its stock
or business by reason thereof, and if Lessor makes or causes such repairs to be
made, Lessee agrees that it will forthwith, on demand, pay to Lessor the cost
thereof and if it shall default in such payment, Lessor shall have the remedies
as in the case of non-payment of monthly rental. For a period commencing one (1)
year prior to the termination of this Lease, Lessor may have reasonable access
to the Leased Premises for the purpose of exhibiting the same to prospective
Lessees.
SECTION 16
FIXTURES AND EQUIPMENT
Section 16.01: All fixtures and equipment paid for by the
Lessor and all fixtures and equipment which may be paid for and placed on the
premises by the Lessee from time to time but which are so incorporated and
affixed to the buildings that their removal would involve damage or structural
change to the buildings, shall be and remain the property of the Lessor.
Section 16.02: All furnishings, equipment and fixtures other
than those specified in Section 16.01, which are paid for and placed on the
premises by Lessee from time to time (other than those which are replacements
for fixtures or equipment originally paid for by Lessor) shall remain the
property of the Lessee only in the event Lessee is not in default of any
provision of this Lease.
SECTION 17
NOTICE OR DEMANDS
Section 17.01: Any notice, demand, request, or other
instrument which may be or is required to be given under this Lease shall be
sent by United States certified mail, return receipt requested, postage prepaid
and shall be addressed (a) if to Lessor, at the address set forth in this
Lease, or at such other address as Lessor may designate by written notice and
(b) if to Lessee, at the Leased Premises or at such other address as Lessee
shall designate by written notice. Notice need be sent to but one Lessee or
Lessor where Lessee or Lessor is more than one person.
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SECTION 18
BANKRUPTCY
Section 18.01: In the event that Lessee shall be adjudicated
or declared bankrupt under, or if any proceedings are filed by or against
Lessee under, the Bankruptcy Code or any similar provisions of any future
federal bankruptcy law, then and in any such event, Lessor may at its option
terminate this Lease and all rights of Lessee hereunder, by giving to Lessee
notice in writing of the election of Lessor to so terminate, in which event
this Lease shall cease and terminate with the same force and effect as though
the date set forth in said notice were the date originally set forth herein and
fixed for the expiration of the term and Lessee shall vacate and surrender the
premises but shall remain liable to the full extent permitted by law.
Section 18.02: If as a matter of law Lessor has no right on
the bankruptcy of Lessee to terminate this Lease, then if Lessee, as debtor, or
its trustee, wishes to assume or assign this Lease, in addition to curing or
adequately assuring the cure of all defaults existing under this Lease on
Lessee's part on the date of filing of the proceedings (such assurances being
defined below), Lessee, as debtor, or its trustee, must also furnish adequate
assurance of future performance under this Lease (as defined below). Adequate
assurance of curing defaults means the posting with Lessor of a sum in cash
sufficient to defray the costs of such a cure. Adequate assurance of future
performance under this Lease means posting a deposit equal to three (3) months'
rent, including all other charges payable by Lessee hereunder, arid in the case
of an assignee, assuring Lessor that the assignee is financially capable of
assuming this Lease, and that its use of the Leased Premises will be as
provided in Section 6.01 of this Lease and for no other use. In a
reorganization under Chapter 11 of the Bankruptcy Code, the debtor or trustee
must assume this Lease or assign it within one hundred twenty (120) days from
the filing of the proceeding or he shall be deemed to have rejected and
terminated this Lease. In a proceeding under Chapter 7 of the Bankruptcy Code,
the debtor or the trustee must assume this Lease or assign it within sixty (60)
days from the filing of the proceeding or he shall be deemed to have rejected
and terminated this Lease.
Section 18.03: In the event that this Lease is assumed by a
bankruptcy trustee appointed for Lessee or by Lessee as Debtor-in-Possession
and thereafter Lessee is liquidated or files a subsequent Petition for
reorganization or adjustment of debts under Chapters 11 or 13 of the Bankruptcy
Code, then, and in either of such events, Lessor may, at its option, terminate
this Lease and all rights of Lessee hereunder, by giving Lessee written notice
of its election to so terminate no later than thirty (30) days after the
occurrence of either of such events.
Section 18.04: When, pursuant to the Bankruptcy Code, a
trustee or Debtor-in-Possession shall be obligated to pay reasonable use and
occupancy charges for the use of the Leased Premises or any portion thereof,
such charges shall not be less than the Annual Rental as defined in this Lease
and all other monetary obligations of Lessee for the payment of maintenance,
Common Area charges, real property taxes, insurance and/or similar charges.
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Section 18.05: Neither Lessee's interest in the Lease, nor
any lesser interest of Lessee herein, nor any estate of Lessee hereby created,
shall pass to any trustee, receiver, assignee for the benefit of creditors, or
any other person or entity, or otherwise by operation of law under the laws of
any state having jurisdiction of the person or property of the Lessee unless
Lessor shall consent to such transfer in writing. No acceptance by Lessor of
rent or any other payments from any such trustee, receiver, assignee, person or
other entity shall be deemed to have waived, nor shall it waive, the need to
obtain Lessor's consent or Lessor's right to terminate this Lease for any
transfer of Lessee's interest under this Lease without such consent.
In the event the estate of Lessee created hereby shall be
taken in execution or by other process of law, or if Lessee or any guarantor of
Lessee's obligations hereunder ("guarantor") shall be adjudicated insolvent
pursuant to the provisions of any present or future insolvency law of any state
having jurisdiction ("state law"), or if any proceedings are filed by or
against such guarantor under the Bankruptcy Code, or any similar provisions of
any future federal bankruptcy law, or if a receiver or trustee of the property
of Lessee or guarantor shall be appointed under state law by reason of Lessee's
or guarantor's insolvency or inability to pay its debts as they become due or
otherwise, or if any assignment shall be made of Lessee's or guarantor's
property for the benefit of creditors under state law; then and in any such
event Lessor may, at its option, terminate this Lease and all rights of Lessee
hereunder by giving Lessee written notice of the election to so terminate
within thirty (30) days after the occurrence of such event.
SECTION 19
DEFAULT OF THE LESSEE, RE-ENTRY AND DAMAGES
Section 19.01: Lessee agrees that it will promptly pay rent,
additional rent at the times above stated, that if any part of the rent or
additional rent and all other monetary obligations remains due and unpaid for
ten (10) days next after the same shall become due and payable, Lessor shall
have the option of declaring the balance of the entire rental term of this
Lease to be immediately due and payable, and Lessor may then proceed to
collect all of the unpaid rent, Annual Rental, additional rent, and all other
monetary obligations called for by this Lease by distress or otherwise. In the
event of
(i) any failure of Lessee to pay any rental or other
charges due hereunder within ten (10) days after the same
shall be due, or
(ii) any failure to perform any other of the terms,
conditions or covenants of this Lease to be observed or
performed by Lessee for more than thirty (30) days after
written notice of such default shall have been mailed to
Lessee or
(iii) if Lessee shall abandon or vacate the Leased Premises,
or suffer this Lease to be taken under any writ of execution;
then Lessor, besides other rights or remedies it may have,
shall have the immediate right to terminate this Lease
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and/or Lessor shall have the immediate right to reentry and
may remove all persons and property from the Leased Premises
and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the account of
Lessee, all without service or notice or resort to legal
process and without being deemed guilty of trespass, or
becoming liable for any loss or damage which may be
occasioned thereby.
In the event of any failure of Lessee to comply with the
provisions of Section 1.05 hereof and a subsequent election by Lessor to
declare this Lease terminated, then possession of the Leased Premises shall not
be deemed to have been delivered to Lessee.
Section 19.02: If Lessor shall be in possession of the Leased
Premises, or if Lessor shall elect to re-enter, as herein provided, or to take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, it may either terminate this Lease or it may, from time to time without
terminating this Lease, make such alterations, improvements and repairs as may
be necessary in order to relet the Leased Premises, and relet the Leased
Premises or any part thereof for such term or terms (which may be for a term
extending beyond the term of this Lease) and at such rental. or rentals and
upon such other terms and conditions as Lessor in its sole discretion may deem
advisable. All costs and expenses of such relenting, including brokerage fees
and attorneys' fees and the costs of such alterations and improvements and
repairs shall be paid by Lessee to Lessor within thirty (30) days of invoice by
Lessor. Upon each such reletting all rentals and other sums received by Lessor
from such reletting except as provided in the preceding sentence shall be
applied: first, to the payment of any indebtedness other than rent due
hereunder from Lessee to Lessor; second, to the payment of rent and other
charges due and unpaid hereunder; and the residue, if any, shall be held by
Lessor and applied in payment of future rent and other charges as the same may
become due and payable hereunder. If such rentals and other sums received from
such reletting during any month are less than that to be paid during that month
by Lessee hereunder, of if Lessor does not relet the Leased Premises, Lessee
shall pay any such deficiency to Lessor. Such deficiency shall be calculated
and paid monthly. No such re-entry or taking possession of the Leased Premises
by Lessor shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention be given to Lessee or unless the
termination thereof be decreed by a court of competent jurisdiction. No
surrender of this Lease shall be deemed to have occurred unless such surrender
is accepted in writing by a duly authorized representative of Lessor.
Notwithstanding any such reletting without termination, Lessor may at any time
thereafter elect to terminate this Lease for such previous breach. Should
Lessor at any time terminate this Lease for any breach, in addition to any
other remedies it may have, it may recover from Lessee all damages it may incur
by reason of such breach, including the cost of recovering the Leased Premises,
reasonable attorneys' fees incidental thereto, and including the worth at the
time of such termination of the excess, if any, of the amount of rent and
charges equivalent to rent and all other monetary obligations reserved in this
Lease for the remainder of the stated term over the then reasonable rental
value of the Leased Premises for the remainder of the stated term, all of
which amounts shall be immediately due and payable by Lessee to Lessor.
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Section 19.03: In case suit shall be brought for recovery of
possession of the Leased Premises, for rent or any other amount due Lessor or
as a result of any breach of any other covenant of Lessee herein contained,
and a breach shall be established, Lessee shall pay Lessor all expenses
incurred in connection herewith including reasonable attorneys' fees.
Section 19.04: The parties hereto hereby waive trial by jury
in any suit brought by either of them in any way connected with this Lease, or
Lessee's occupancy of the Leased Premises, and/or any claim of injury or
damage. In the event Lessor commences any proceedings for nonpayment of rent,
or other charges due under this Lease, Lessee shall not interpose any
counterclaim of any nature whatsoever in any such proceedings. This shall not,
however, be construed as a waiver of the Lessee's right to assert such claims
in any separate action or actions brought by Lessee.
Section 19.05: If Lessee shall fail to pay any rent or
other charges when the same shall be due and payable, such unpaid amount shall
bear interest from the due date thereof to the date of payment at the highest
lawful rate then provided by applicable law, but the payment of such interest
shall not excuse or cure any default by Lessee under this Lease. If no maximum
interest rate is then provided by applicable law, the interest rate shall be
eighteen percent (18%) per annum. In addition, Lessee agrees to pay a four
percent (4%) late fee on each payment of a monetary obligation not paid by
Lessee within ten (10) days after the same should be due.
Section 19.06: Each and every remedy set forth in this Lease
shall be deemed to be cumulative and in addition to any other right or remedy
at law or in equity. The exercise by Lessor of any remedy herein shall not be
deemed exclusive or to preclude the use of Lessor of any other remedy set forth
herein or remedy at law or in equity simultaneously therewith or at any later
time.
SECTION 20
SURRENDER OF PREMISES ON TERMINATION
Section 20.01: Whenever this Lease shall be terminated,
whether by lapse of time, forfeiture or in any other way, Lessee will yield and
deliver up the demised premises, including the building and improvements
thereon and the fixtures and equipment belonging to Lessor therein contained,
peaceably to Lessor in as good repair as when taken, except for reasonable and
normal wear and tear.
The Lessee hereby agrees that for a period commencing three
hundred sixty (360) days prior to the termination of this Lease, the Lessor may
show the premises to prospective Lessees, and three hundred sixty (360) days
prior to the termination of this Lease, Lessor may display about said premises
the usual and ordinary "For Lease" signs.
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SECTION 21
OFFSET STATEMENT, SUBORDINATION AND ATTORNMENT
Section 21.01: Lessee agrees within ten (10) days after
request therefor by Lessor to execute in recordable form and deliver to Lessor
a statement, in writing, certifying (a) that this Lease is in full force and
effect, (b) the date of commencement of rent and that rent is paid currently
without any offset or defense thereto, (c) the amount of rent, if any, paid in
advance, (d) the commencement and termination date of the Lease, and (e) such
other items as Lessor may reasonably request, provided that, in fact, such
facts are accurate and ascertainable.
Section 21.02: This Lease shall be subordinate to any
mortgage now existing or hereafter placed upon the Leased Premises and to any
and all advances to be made thereunder, and to the interest thereon, and all
renewals, replacements and extensions thereof. Notwithstanding the foregoing,
at the request of said mortgagee, this Lease may be made prior and superior to
any mortgage. Lessee agrees that, upon the request of Lessor or any mortgagee,
Lessee shall execute whatever instruments may be required to further evidence
or carry out the intent of this Section. Lessee hereby irrevocably constitutes
and appoints Lessor as Lessee's attorney in fact, such appointment being a
power coupled with an interest, to execute and deliver whatever instruments may
be required to further evidence or carry out the intent of this Section. Lessee
shall, in the event any proceedings are brought for the foreclosure of, or in
the event of exercise of the power of sale under, any mortgage made by Lessor
covering the Leased Premises, attorn to the purchaser upon any such foreclosure
or sale and recognize such purchaser as the Lessor under this Lease, provided,
however, that no such documentation shall impose any additional liabilities on
Lessee other than those contained in this Lease and any instruments required to
be executed by Lessee shall provide that mortgagee agrees for itself and every
subsequent holder or owner of the mortgage that in the event of foreclosure,
Lessee's rights to quiet enjoyment of the premises would not be disturbed or
impaired on account of such foreclosure provided that Lessee is not in default
hereunder.
Section 21.03: Lessee agrees to give any mortgagees, by
registered mail, a copy of any notice of default served upon the Lessor,
provided that prior to such notice Lessee has been notified, in writing (by way
of Notice of Assignment of Rents and Leases, or otherwise), of the address of
such mortgagees. Lessee further agrees that if Lessor shall have failed to cure
such default within the time provided for in this Lease, then the mortgagees
shall have ail additional sixty (60) days within which to cure such default or
if such default cannot be cured within that time, then such additional time as
may be necessary if within such sixty (60) days, any mortgagee has commenced
and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated while such remedies are being so diligently pursued.
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SECTION 22
RULES AND REGULATIONS
Section 22.01: Lessee agrees to comply with and observe all
rules and regulations established by Lessor from time to time, provided the
same shall apply uniformly to all lessees of the development. Lessee's failure
to keep and observe said rules and regulations shall constitute a breach of the
terms of this Lease in the same manner as if the same were contained herein as
covenants.
SECTION 23
SECURITY DEPOSIT
Section 23.01: The Lessor herewith acknowledges SIXTEEN
THOUSAND THREE HUNDRED EIGHTY NINE AND 00/100 DOLLARS ($16,389.00), due and
payable in two equal installments of EIGHT THOUSAND ONE HUNDRED NINETY FOUR AND
50/100 DOLLARS ($8,194.50), the first one due upon execution of this lease
agreement, and the second one due on the 1st day of the month of the second
month of the lease term, which it is to retain as-security f or the faithful
performance of all of the covenants, conditions and agreements of this Lease,
but in no event shall the Lessor be obliged to apply the same upon rents or
other charges in arrears or upon damages for the Lessee's failure to perform
the said covenants, conditions, and agreements; the Lessor may so apply the
security at its option; and the Lessor's right to the possession of the
premises for nonpayment of rent or for any other reason shall not in any event
be affected by reason of the fact that the Lessor holds this security. The said
sum if not applied toward the payment of rent or other charges in arrears or
toward the payment of damages suffered by the Lessor by reason of the Lessee's
breach of the covenants, conditions, and agreements of this Lease, shall be
returned to the Lessee when this Lease is terminated, according to these terms
and in no event is said security to be returned until the Lessee has vacated
the premises, delivered possession to the Lessor in a broom clean condition and
Lessor has inspected said premises; and further provided Lessee has delivered
to Lessor a Phase I Environmental Report by a licensed environmental engineer
certifying that during the term of this Lease, no hazardous material or
hazardous condition existed or was created within the Leased Premises, the
Common Areas, and the property related thereto attributable to any act or
failure to act by Tenant, its employees, agents, contractors, invitees or
anyone else occupying all or any portion of the Leased Premises during the term
of this Lease.
In the event that the Lessor repossesses itself of the said
premises because of the Lessee's default or because of the Lessee's failure to
carry out the covenants, conditions and agreements of the Lease, the Lessor may
apply the said security upon all damages suffered to the date of said
repossession and may retain the said security to apply upon such damages as may
be suffered or shall accrue thereafter by reason of the Lessee's default or
breach. The Lessor shall
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not be obliged to keep the said security as a separate fund, but may mix the
said security with its own funds and there shall be paid no interest on said
security deposit.
SECTION 24
HOLDING OVER
Section 24.01: In the event of Lessee herein holding over
after the termination of this Lease, thereafter the tenancy shall be from month
to month in the absence of a written agreement to the contrary, subject to all
the conditions, provisions and obligations of this Lease insofar as the same
are applicable to a month to month tenancy but at a monthly rental double the
highest monthly rental stipulated in Section 3.
SECTION 25
LESSEE'S PROPERTY
Section 25.01: Lessee shall be responsible for and shall pay
all municipal, county, state and federal taxes assessed during the term of this
Lease against any leasehold interest or personal property of any kind, owned by
or placed in, upon or about the Leased Premises by the Lessee.
Section 25.02: The Lessor shall not be responsible or liable
to the Lessee for any loss or damage that may be occasioned by or through the
acts or omissions of persons occupying adjoining premises, or any part of the
building adjacent to or connected with the premises hereby leased, or any part
of the building or the development of which the Leased Premises are a part, or
for any loss or damage resulting to the Lessee or its property from bursting,
stoppage or leaking of water, gas, sewer, or steam pipes, or for any damage or
loss of property on or within the Leased Premises or the building or the
development from any cause whatsoever.
Section 25.03: Lessee shall give immediate notice to Lessor
in case of fire or other casualty in the Leased Premises or in the building of
which the premises are a part, or of defects therein or in any fixtures or
equipment.
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SECTION 26
DEFINITION
Section 26.01: For the purpose of this Lease, the term net
constructed leasable floor area shall mean the total square feet of constructed
floor area in Airside Commerce Park excluding therefrom the floor area of any
of the following areas not leased to Lessee or any other occupants of this
development:
employee bathrooms, lounges, and eating areas
stairways, corridors, and hallways
lobbies, entries, and atriums
all mechanical, electrical and phone rooms, and janitor closets
duct shafts and elevator shafts, mail room and vending areas,
penthouses
storage rooms
any other common area
SECTION 27
MISCELLANEOUS
Section 27.01: This Lease shall be governed by, and construed
in accordance with, the laws of the State of Florida. If any provision of this
Lease or the application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Lease shall not be
affected thereby and each provision of the Lease shall be valid and enforceable
to the fullest extent permitted by law.
Section 27.02: The captions of this Lease are for convenience
only and are not to be construed as part of this Lease and shall not be
construed as defining or limiting in any way the scope of intent of the
provisions hereof.
Section 27.03: Lessee represents and warrants to Lessor that
there are no claims for brokerage commissions or finder's fees in connection
with this Lease based upon or arising out of any agreement or act of Lessee,
and Lessee agrees to indemnify Lessor and hold it harmless from all liabilities
in connection with any such claim arising from an alleged agreement or act of
Lessee (including, without limitation, the cost of attorneys' fees in
connection therewith): such agreement to survive the termination of this Lease.
Section 27.04: This Lease shall constitute the entire
agreement of the parties hereto; all prior agreements between the parties,
whether written or oral, are merged herein and shall be of no force and effect.
This Lease cannot be changed, modified or discharged orally but only by an
agreement in writing, signed by the party against whom enforcement of the
change, modification or discharge is sought.
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Section 27.05: No personal liability of any kind under any of
the terms, conditions or provisions of this Lease shall attach to the Lessor
(including any leasing agent, broker or other agent or representative of
Lessor) for the payment of any amounts payable under this Lease or for the
performance of any terms, conditions or provisions required to be performed by
Lessor under this Lease. If Lessor shall fail to perform any term, condition or
provision of this Lease required to be performed by Lessor and if as a
consequence of such default Lessee shall recover a money judgment against
Lessor, such judgment shall be satisfied only out of the proceeds of sale
received upon execution and levy of such judgment against the right, title and
interest of Lessor in the Airside Commerce Park and out of rents or other
income from such property receivable by Lessor, or out of payments received by
Lessor upon the sale or other disposition of all or any part of Lessor's right,
title and interest in Airside Commerce Park, and neither Lessor nor any of the
partners of the partnership which is Lessor hereunder or any other person or
entity shall be personally liable for any such judgment or monetary deficiency.
Section 27.06: In the event of any transfer or transfers of
Lessor's interest in the premises. including a so-called sale-leaseback, the
transferor shall be automatically relieved of any and. all obligations on the
part of Lessor accruing from and after the date of such transfer, provided that
(a) the interest of the transferor as Lessor, in any funds then in the hands of
Lessor in which Lessee has an interest shall be turned over, subject to such
interest, to the then transferee; and (b) notice of such sale, transfer or
Lease shall be given to Lessee as required by law. Upon termination of any such
Lease in a sale-leaseback transaction prior to termination of this Lease, the
former Lessee thereunder shall become and remain liable as Lessor and shall be
responsible in connection with the security deposited hereunder, unless such
mortgagee or Lessor shall have actually received the security deposited
hereunder.
Section 27.07: Lessor intends to initially refer to the
development in which the Leased Premises are located as the Airside Commerce
Park. Lessor hereby reserves the right at any time and from time to time,
without notice to Lessee, to change the name of said development or any of the
buildings located therein at Lessor's discretion.
Section 27.08: Upon Lessor's written request, but in no event
more than once each year, Lessee shall promptly furnish Lessor from time to
time, financial statements reflecting Lessee's current financial condition.
Section 27.09: Lessee shall not record this Lease without the
written consent of Lessor; however, upon the request of either party hereto,
the other party shall join in the execution of a memorandum or so-called "short
form" of this Lease for the purpose of recording. Said memorandum or short form
of this Lease shall describe the parties, the Leased Premises, the term of this
Lease, any special provisions, and shall incorporate this Lease by reference.
Section 27.10: Nothing contained herein shall be deemed or
construed by the parties hereto, nor by any third party, as creating the
relationship of principal and agent or of partnership or joint venture between
the parties hereto, it being understood and agreed that neither the method of
computation of rent, nor any other provision contained herein, nor any acts of
the parties herein, shall be deemed to create any relationship between the
parties hereto other
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<PAGE> 30
than the relationship of Lessor and Lessee. Whenever herein the singular number
is used the same shall include the plural, and vice versa, and the use of any
single gender shall include all other genders. In the event any language is
deleted from this Lease, said language shall be deemed to have never appeared
and no other implication shall be drawn therefrom.
Section 27.11: No payment by Lessee or receipt by Lessor of a
lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Lessor shall accept
such check or payment without prejudice to Lessor's right to recover the
balance of such rent or pursue any other remedy in this Lease provided.
Section 27.12: The submission of this Lease for examination
does not constitute a reservation of or option for the Leased Premises, and
this Lease shall become effective as a Lease only upon execution and delivery
thereof by Lessor and Lessee.
Section 27.13: Lessee shall observe and comply with all
reasonable rules and regulations established by Lessor and GOAA including
access, use, safety, and conduct of operations of the Airport and the safe use
of Airport facilities.
SECTION 28
RELOCATION
[This section has been deleted in its entirety.]
SECTION 29
LESSEE'S OPTIONAL LEASE TERMINATION RIGHT
Section 29.01: Tenant shall have the right to terminate this
lease as of the expiration of the thirty sixth (36th) full calendar month,
Optional Lease Termination Date, only if Lessee complies with the requirements
stipulated below.
Section 29.02: Lessee's optional right to terminate shall
only apply if proper notice is given by the Tenant at least two hundred seventy
(270) days prior to the expiration of the thirty sixth (36th) full calendar
month after the Lease Commencement Date and further provided Lessee has paid
all Lease obligations up through and including the Optional Lease Termination
Date of the term of the Lease, the expiration of the thirty sixth (36th ) full
calendar month, and Lessee surrenders the Leased Premises to Landlord on or
before the expiration of such Optional Lease Termination Date in a broom clean
and tidy condition, ordinary wear and tear and damage from fire and/or other
casualty excepted.
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<PAGE> 31
Section 29.03: In the event Lessee does not timely comply
with all of these conditions, then Lessee shall have no right to terminate this
Lease as of the expiration of the thirty sixth (36th) full calendar month of
the term hereof, and the Lease shall remain in full force and effect for the
full term of this Lease, four (4) years.
IN WITNESS WHEREOF, the Lessor and Lessee have executed this
Lease as of the date set forth at the outset hereof.
WITNESSES: LESSOR:
LANDO TRADEPORT LIMITED
PARTNERSHIP
/s/ Patricia Kausch /s/ Stuart Frankel
- ----------------------------- By:-----------------------------
Patricia Kausch Stuart Frankel
"Landlord"
LESSEE:
WORLD COMMERCE ONLINE, INC.
/s/ Donna Shaffer By: /s/ Kenneth B. Cobb II
- ----------------------------- -----------------------------
Donna Shaffer Kenneth B. Cobb II
Chief Financial Officer
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<PAGE> 32
EXHIBIT "A"
<PAGE> 33
EXHIBIT "A-1"
<PAGE> 34
EXHIBIT "B"
LEGAL DESCRIPTION
Lots 1 and 2, ORLANDO TRADEPORT CENTRAL AIRSIDE AREA SECTION ONE, as recorded
in Plat Book 18, Page 38, Public Records of Orange County, Florida.
<PAGE> 35
EXHIBIT "C"
Not Applicable
<PAGE> 36
EXHIBIT "D"
CONSTRUCTION OBLIGATIONS
Landlord shall deliver the Leased Premises to Tenant in an "as is" condition
and Tenant shall accept same in an "as is" condition except as per specified
herein below. Landlord agrees to pay for the following:
1. Landlord will do initial maintenance check on all air
conditioning and heating units.
2. Landlord will do initial maintenance check on all plumbing.
3. Landlord will do initial maintenance check on all electrical
panels, fire exits signs and emergency lights.
4. Landlord will do initial pre-tenant move in cleaning of entire
space and clean all carpet not being replaced in the executive
areas.
5. Landlord agrees at landlord's sole cost and expense to complete
the tenant improvements in the designated executive areas of the
leased premises, see Exhibit "D-1", including new carpet, paint,
new partitions and vinyl coated flooring in the bathrooms, upper
and lower cabinets in the breakroom, and replacing any door knobs
missing from any doors.
6. Tenant agrees at tenant's sole cost and expense to complete any
other tenant improvements required beyond the executive areas of
the leased premises, see Exhibit "D-1".
7. Tenant agrees to pay for the requested wallpaper in the executive
areas at tenant's sole cost and expense.
8. Landlord agrees to terminate and release World Commerce Online,
Inc. from the lease agreements on 9419 Tradeport Drive, Orlando,
Florida and 9675 Tradeport Drive, Orlando, Florida from the date
that this lease agreement commences. All lease obligations shall
be pro-rated based on the date of move out from the old lease
premises to the new lease premises.
9. Tenant agrees to turn over the old leased premises in a broom
clean condition.
<PAGE> 37
EXHIBIT "D-1"
February 22, 1999
Mr. Don Moore
Nations Bank
750 South Orlando Avenue, Suite 200
Winter Park, FL 32789-4845
Re: Airside Commerce Park
Dear Mr. Moore:
I have enclosed a photocopy of the following documents:
- First Amendment to Lease Agreement for Roses Direct, Inc.
- First Amendment to Lease Agreement for GTE Airfone, Inc.
- Second Amendment to Lease Agreement for Dawn's Place
- Second Amendment to Lease Agreement for Gulfstream Aviation
Enterprises, Inc.
- Second Amendment to Lease Agreement for Roses Direct, Inc.
- Third Amendment to Lease Agreement for Roses Direct, Inc.
- Lease Agreement for Power & Systems Innovations, Inc.
- Lease Agreement for World Commerce Online
- Estoppel Certificates for:
- Gulfstream Aviation Enterprises
- Pre-Flight Services, Inc.
- Premier Freight Forwarders, Inc.
- Greenick, Inc. dba Airworks
- World Commerce Online
If you have any questions, please call me.
Sincerely,
Donna Shaffer
Property Manager
enc.
<PAGE> 38
October 19, 1999
Mr. Don Moore
Bank of America
Real Estate Banking Group
750 S. Orlando Avenue, Suite 200
Winter Park, FL 32789-4845
Re: Airside Commerce Park
Dear Mr. Moore:
I have enclosed a photocopy of the following documents:
- Estoppel Certificates for: Radixx Solutions International, Inc.
Roller Gear, Inc.
World Commerce Online
- First Amendment to Lease Agreement for World Commerce Online, Inc.
- Second and Third Amendment to Lease Agreement for MIT Lincoln Laboratory
- Fifth and Sixth Amendment to Lease Agreement for Roses Direct, Inc.
If you have any questions, please call me.
Sincerely,
Donna Shaffer
Property Manager
enc.
<PAGE> 1
Exhibit 10.8
CONSULTING SERVICES AGREEMENT
NO.
This Consulting Services Agreement (the "Agreement"), dated as of
August 11, 1999 ("Effective Date") between WORLD COMMERCE ONLINE, INC., with
offices located at 9677 TRADEPORT DRIVE, ORLANDO, FLORIDA, 32827,
("Contractor"), and ANSWERTHINK CONSULTING GROUP, INC., a Florida corporation
with an office at 3200 Windy Hill Road, Suite 800 West, Atlanta, GA 30339
("Subcontractor").
WHEREAS, Contractor desires to retain Subcontractor to perform
information technology consulting services;
WHEREAS, Subcontractor desires to perform such information technology
consulting services for Contractor.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. PURPOSE OF ENGAGEMENT. Contractor agrees to retain Subcontractor to
perform information technology consulting services for Contractor, on a task by
task basis (the "Services"), and Subcontractor agrees to furnish the Services on
the terms and subject to the conditions set forth in this Agreement. During the
term of this Agreement, Contractor and Subcontractor will develop and agree upon
Statements of Work ("SOWs") defining the Services and deliverables (if any) to
be provided by Subcontractor, Subcontractor's compensation, deadlines, if any,
and such other details as the par-ties deem appropriate. SOWs which are from
time to time agreed upon shall reference this Agreement and shall be executed by
the parties and attached hereto and shall form a part hereof. The SOWs with
respect to the Services initiated or completed prior to the date hereof are
attached hereto and made a part of this Agreement. In the event of a conflict
between the provisions of this Agreement and the specific provisions set forth
in the SOWS, the provisions of such SOWs shall control.
2. PERFORMANCE OF SERVICES. Subcontractor shall provide sufficient
qualified personnel to perform the Services required by the SOWs in a competent
and workmanlike manner in accordance with applicable industry standards.
Contractor shall have the right to require Subcontractor to replace personnel
that Contractor reasonably determines to be performing the Services in an
unsatisfactory manner and Subcontractor shall promptly reply with any such
request in no event, no more than five (5) days from the date of notice.
Subcontractor's personnel performing the Services on Contractor's premises shall
comply with all rules and regulations of which they have received notice.
Subcontractor agrees to perform the Services in a manner consistent with
applicable professional standards. Contractor agrees to provide Subcontractor
with access to and use of Contractor's personnel, facilities and equipment to
the extent necessary for Subcontractor to perform the Services and with access
to Contractor's customers' personnel, facilities and equipment to the extent
that Contractor has access to same and to the extent necessary to perform the
Services. SOWs may set forth additional details regarding Subcontractor's access
to and use of Contractor's personnel, facilities and equipment.
3. ACCEPTANCE. Contractor will accept Services provided by
Subcontractor upon acceptance of such Services by Contractor's customer, in the
customer's reasonable discretion, judged on the terms and specifications
contained in the applicable SOW. In any event, Services will be deemed accepted
if not rejected in writing within thirty (30) days after delivery.
<PAGE> 2
4. TERM. The term of this Agreement shall begin on the date
Subcontractor first began rendering the Services contemplated hereby and shall
continue until terminated by either party pursuant to Paragraph 9 hereof.
5. SUBCONTRACTOR'S COMPENSATION. During the term of this Agreement,
Contractor agrees to compensate Subcontractor as set forth in each SOW.
Subcontractor may be compensated on a time and materials or fixed price basis as
stated in the applicable SOW. In addition, Contractor shall reimburse
Subcontractor for its preapproved reasonable out-of-pocket expenses incurred by
Subcontractor in connection with its performance of the Services. Subcontractor
shall bill Contractor at biweekly intervals for time and materials engagements
or at agreed-upon milestones, for fixed price engagements, all as set forth in
the relevant SOW. Invoices shall be mailed to Contractor at the address set
forth in Paragraph 16 hereof. Each invoice submitted by Subcontractor will
provide complete supporting detail for the Services invoiced, including, to the
extent applicable to a particular engagement, the dates of Services and hours
worked at the negotiated rate on each day. Invoices shall also include receipts
or other suitable detail concerning related expenses. Contractor shall pay
undisputed invoices or provide written notice of disputed invoices within thirty
(30) days of receipt. The parties agree to use good faith best efforts to
resolve disputes concerning invoices within sixty (60) days of the date of
Contractor's receipt of the applicable invoice. Hourly rates to be charged by
Subcontractor personnel shall be as set forth in the applicable SOW.
6. OWNERSHIP OF MATERIALS RELATED TO SERVICES. (a) The parties agree
that all right, title and interest (including copyrights) in and to all
information, drawings, documents, designs, models, patents, inventions,
copyrightable material and other tangible and intangible materials authored or
prepared by Subcontractor for Contractor under any SOW (collectively, the
"Works"), other than Subcontractor's administrative communications, records,
files and working papers relating to this Agreement and the Services, are the
sole and exclusive property of Contractor and shall be considered works made for
hire. In the event any such Works do not fall within the specifically enumerated
works that constitute works made for hire under the United States copyright
laws, Subcontractor hereby agrees to assign and, upon their authorship or
creation, expressly and automatically assigns, all copyrights, proprietary
rights, trade secrets, and all other right, title and interest in and to the
Works to Contractor. Subcontractor agrees to render all reasonably required
assistance to Contractor to protect the rights hereinabove described.
(b) To the extent the Works provided by Subcontractor
hereunder utilize or contain software product(s), specifications or other
materials or information ("Materials") which have been developed independent of
the Works provided hereunder and not under the terms of this Agreement or any
SOW attached hereto, Subcontractor hereby grants Contractor an irrevocable,
perpetual, fully paid license (with the right to sublicense at any number of
levels) such Materials as will permit Contractor to achieve the purpose of the
applicable SOW for which the Materials were delivered.
(c) Notwithstanding anything to the contrary set forth herein,
Subcontractor shall have the right to retain a copy of each of the Works for its
records but shall treat such Works as Confidential Information of Contractor.
7. RESIDUALS. Contractor agrees that Subcontractor shall be free to use
and employ their general skills, know-how, and expertise to use, disclose, and
employ any generalized ideas, concepts, know-how, methods and techniques, or
skills gained or learned during the course of any services performed hereunder,
so long as is or they do not disclose confidential information of Contractor.
Subcontractor may retain copies of high level generalized ideas, concepts,
know-how, methods and
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<PAGE> 3
techniques which are resident in electronic form, provided, however, that no
such electronic document or file shall contain any confidential information,
software or utility developed under this Agreement or belonging to Contractor or
any of its customers.
8. SUBCONTRACTOR'S WARRANTIES. Subcontractor warrants to Contractor
that:
(a) Subcontractor's performance of the Services called for by
this Agreement does not and shall not violate any applicable law, rule, or
regulation;
(b) Subcontractor has full authority and sufficient right,
title, and interest in and to any developed computer programs, computer systems,
data, computer documentation or other material whatsoever, exclusive of rights
respecting programs, data and materials created by Contractor or identified by
Contractor as furnished to Contractor by third-party vendors, to grant and
convey the rights accorded to Contractor under Paragraph 6 hereof;
(c) Subcontractor represents and warrants that the Services to
be performed hereunder shall be performed in a timely and professional manner
and in accordance with the highest professional standards for such Services, and
will strictly comply with the descriptions and representations regarding the
Services (including performance capabilities, accuracy, completeness,
characteristics, specifications, configurations, standards, functions and
requirements) that are set forth in the Agreement and the applicable SOW. Works
provided by Subcontractor hereunder will conform to the specifications of the
applicable SOW. During the period of time defined in the SOW and if such period
is not defined, for a period of ninety (90) days from acceptance of the Works
and/or completion of the Services, as applicable ("Warranty Period"), or such
longer period provided that Contractor notifies Subcontractor of the
nonconformity during the Warranty Period, Subcontractor will remedy, without
charge to Contractor or Contractor's customer, any and all parts of the Services
and/or Works which Contractor or its customer find to be nonconforming.
Subcontractor shall replace or begin to correct nonconforming Work and/or
reperform the Services within three (3) business days (or immediately in the
event that the nonconformity causes a complete system failure) upon Contractor's
notice of such to Subcontractor, and shall continue to work diligently, at no
charge, until the nonconformity is corrected, providing periodic written
progress reports as requested by Contractor or until such Services are
terminated as provided for under this Agreement;
(d) During the Warranty Period, if Subcontractor is unable to
remedy any nonconforming Work or correctly reperform any Services within the
time set forth in the applicable SOW and if no time is specified, within thirty
(30) days from written notice of the nonconformity, Contractor shall have the
right to terminate the applicable SOW and either (i) return the non-conforming
Works, if any, to Subcontractor and receive a refund of all payments made by
Contractor to Subcontractor under the applicable SOW for services related to the
nonconforming works, or (ii) keep the nonconforming Works "as is." If Contractor
determines to keep the non-conforming Works "as is", Contractor may withhold any
and all remaining payments on invoiced amounts related to the nonconforming
Works and Subcontractor will pay Contractor any additional costs incurred by
Contractor in remedying the nonconforming Work up to the amount set forth on the
applicable SOW attributable to estimated fees associated with the nonconforming
Work;
(e) Each party represents that the services and/or products
furnished to the other party hereunder will be of original development by the
providing party or, in the case of third party products, that the providing
party has the right to provide such third party products to the other party for
the purpose of that party performing its duties and/or exercising its rights
hereunder.
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<PAGE> 4
Except as otherwise stated herein, Subcontractor makes no
representations or warranties, express or implied, to Contractor or any other
person with respect to such Services or Work or items to be provided by
Subcontractor pursuant to this Agreement, including, without limitation, any
warranties regarding ownership, merchantability, suitability, capacity,
originality, fitness for a particular or other purpose (irrespective of any
previous course of dealing between the parties or custom or usage of trade) or
results be derived from the use of services.
9. TERM AND TERMINATION. The term for providing Services and/or Works
under this Agreement shall be from the date first written above and shall
continue in effect until terminated by either party with thirty (30) days prior
written notice.
10. LIABILITIES AND REMEDIES FOR INFRINGEMENT. (a) Subcontractor hereby
agrees to indemnify, hold harmless and defend Contractor against all claims,
liabilities, losses, expenses (including reasonable attorneys' fees and legal
expenses related to such defense), fines, penalties, taxes or damages
(collectively, "Liabilities"), asserted by any third party against Contractor to
the extent such Liabilities result from the violation by Subcontractor of any
third party's trade secrets, proprietary information, trademark, copyright, or
patent rights in connection with the performance of the Services by
Subcontractor. Contractor shall promptly notify Subcontractor of any third party
claim subject to indemnification hereunder and Subcontractor shall have the
right to conduct the defense or settlement of any such third party claim at
Subcontractor's sole expense and Contractor shall cooperate with Subcontractor
in connection therewith. The foregoing provisions shall not apply to the extent
that any infringement arises out of (i) use of the Works other than in
accordance with applicable documentation or instructions supplied by
Subcontractor, or (ii) any alteration, modification or revision of the Works not
explicitly authorized by Subcontractor.
(b) Subject to subparagraph (c) of this Paragraph 10, in case
any of the Works or any portion thereof is held in any such suit to constitute
infringement and the use thereof is enjoined, Subcontractor shall, within a
reasonable time, at its option, either (i) secure :or Contractor the right to
continue the use of such infringing item by procuring for Contractor a license
or other permission as will enable Contractor to secure the suspension of any
injunction or (ii) replace, at Subcontractor's sole expense, such item with a
substantially equivalent noninfringing item or modify such item so that it
becomes non-infringing. In the event Subcontractor is unable to procure the
aforementioned license or permission or replace the infringing item as provided
herein at Contractor's option, Contractor may return the infringing items and
Subcontractor shall accept the return of the infringing item and refund to
Contractor the amount paid to Subcontractor under this Agreement attributable to
the infringing item.
(c) The provisions of this Paragraph 10 state Subcontractor's
entire liability and Contractor's sole remedy with respect to infringement.
(d) Contractor agrees to indemnify, hold harmless
Subcontractor against all claims, liabilities, losses, expenses (including
attorneys' fees and legal expenses related to such defense), fines, penalties,
taxes or damages (collectively, "Liabilities"), asserted by any third party
against Subcontractor to the extent such Liabilities result from the violation
by Contractor of any third party's trade secrets, proprietary information,
trademark, copyright, or patent rights in connection with the materials provided
by Contractor to Subcontractor under this Agreement, which Subcontractor
modifies or uses to carry out its obligations and duties hereunder.
Subcontractor shall promptly notify Contractor of any third party claim subject
to indemnification hereunder and Contractor shall have the right to conduct the
defense or settlement of any such third party claim at Contractor's sole expense
and Subcontractor shall cooperate
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<PAGE> 5
with Contractor in connection therewith. The foregoing provisions shall not
apply to the extent that any infringement arises out of (i) use of the materials
other than in accordance with Subcontractor's provision of Services hereunder,
or (ii) any alteration, modification or revision of the materials not explicitly
authorized by Contractor.
(e) Subject to subparagraph (f) of this Paragraph 10, in case
any of the materials or any portion thereof is held in any such suit to
constitute infringement or if Contractor reasonably believes that such a claim
will be made, Contractor shall, within a reasonable time, at its option, either
(i) secure for Subcontractor the right to continue the use of such infringing
item by procuring a license or other permission, or (ii) replace, at
Contractor's sole expense, such item with a substantially equivalent
non-infringing item or modify such item so that it becomes non-infringing. In
the event Contractor is unable to procure the aforementioned license or
permission or replace the infringing item as provided herein at Contractor's
option, Contractor may terminate this Agreement and pay to Subcontractor the
amount for Services satisfactorily performed to the date of termination.
(f) The provisions of this Paragraph 10 state Contractor's
entire liability and Contractor's sole remedy with respect to infringement.
11. INDEMNIFICATION OF SUBCONTRACTOR: LIMITATION OF LIABILITY. (a)
Except with respect to Subcontractor's obligation to indemnify, hold harmless
and defend Contractor pursuant to Paragraph 10 hereof, each party's maximum
liability hereunder and under any SOW shall be limited to the amount of fees
paid to Subcontractor for the performance of such Services under each SOW.
(b) Each party shall have no liability to the other party for
any special, incidental or consequential damages, including without limitation
loss of profits, even if such party has been advised of the possibility of such
damages.
12. CONTRACTOR CONFIDENTIAL INFORMATION. Each party will-treat as
confidential and will not divulge to any third party, or use or permit persons
under its direction to use for any unauthorized purpose, all information
disclosed to it by the other party (including, in the case of Contractor
Confidential Information, information belonging to any client or customer of
Contractor), or developed under this Agreement and belonging to the other party,
which is either marked "confidential," "proprietary" or the like, or which
should under the circumstances be reasonably understood to be confidential
information. This restriction applies during and after the term of this
Agreement, but shall not apply to any information which (a) becomes public
knowledge through no violation of this Agreement by the receiving party, (b) is
already known by the receiving party at the time of disclosure with no reference
to the disclosing party's confidential Information. For purposes of this
Agreement, "Confidential Information" includes without limitation know-how,
formulae, computer programs, software and documentation, secret processes or
machines, inventions and research projects, information about costs, profits,
markets, sales, customers, suppliers and employees (including salary,
evaluation, and other personnel data), plans for further development, and any
other information of a similar nature. The receiving party will have the burden
of proving the applicability of any exception hereunder. Nothing herein shall
prevent Contractor from fulfilling its obligations to its customers with regard
to customer's need to access and utilize Confidential Information. Confidential
Information shall not include any information which (i) was available to or in
the possession of the parties prior to the time of disclosure by the parties or
their representatives, (ii) is or becomes generally available to the public
other than as a result of a disclosure by the parties, their directors, officers
and employees, agent or representatives; (iii)
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<PAGE> 6
is or becomes available to the parties on a non-confidential basis by a third
party which his not bound by a confidentiality agreement with the parties; or
(iv) is required by law to be disclosed.
13. INDEPENDENT SUBCONTRACTOR. Subcontractor is performing the Services
as an independent subcontractor and not as an employee of Contractor and none of
Subcontractor's personnel shall be entitled to receive any compensation,
benefits or other incidents of employment from Contractor. Subcontractor shall
be responsible for all taxes and other expenses attributable to the rendition of
Services hereunder to Contractor, and Subcontractor shall indemnify, hold
harmless and defend Contractor from any and all claims, liabilities, damages,
taxes, fines or penalties sought or recovered by any governmental entity,
including but not limited to the Internal Revenue Service or any state taxing
authority, arising out of Subcontractor's alleged failure to pay federal, state
or local taxes during the ten-n of this Agreement. Nothing in this Agreement
shall be deemed to constitute a partnership or joint venture between Contractor
and Subcontractor, nor shall anything in this Agreement be deemed to constitute
Subcontractor or Contractor the agent of the other. Neither Subcontractor nor
Contractor shall be or become liable or bound by any representation, act or
omission whatsoever of the other.
14. NONASSIGNABILITY. Neither party shall assign, transfer, or
subcontract this Agreement or any of its obligations hereunder without the other
party's express, prior written consent.
15. NON-SOLICITATION OF EMPLOYEES. During the term of any individual
SOW attached hereto, and for a period of six (6) months following date of
termination of such SOW, neither party will actively solicit for employment
those employees of the other party who are directly involved in the performance
or receipt of Services or Works under such SOW, without prior written permission
by both parties.
16. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally to such party or if mailed by registered or certified mail
or, if sent by recognized overnight delivery service, addressed as follows:
If to Contractor:
World Commerce Online, Inc.
9677 Tradeport Drive
Orlando, Florida, 32827
Attn: Tucker Byrd, Esq.
With a copy to:
Jack R. Daniel, II
Executive Vice President
-------------------------
-------------------------
-------------------------
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<PAGE> 7
If to Subcontractor:
AnswerThink Consulting Group, Inc.
1001 Brickell Bay Drive
Suite 3000
Miami, Florida 33131
Attention: Joe Dugan, Managing Director - ebusiness Solutions
with a copy to:
AnswerThink Consulting Group, Inc.
1001 Brickell Avenue
Suite 3000
Miami, FL 33131
Attention: Ted A. Fernandez, Chief Executive Officer and President
17. SEVERABILITY. In the event that any term or provision of this
Agreement shall be held to be invalid, void or unenforceable, then the remainder
of this Agreement shall not be affected, impaired or invalidated, and each such
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without regard to
the conflict of laws provisions thereof.
18. INTEGRATION. This Agreement, including any SOWs entered into
pursuant hereto, constitutes the entire agreement of the parties hereto and
supersedes all prior and contemporaneous representations, proposals,
discussions, and communications, whether oral or in writing. This Agreement may
be modified only in writing and shall be enforceable in accordance with its
terms when signed by each of the parties hereto.
19. INSURANCE. Throughout the term of this Agreement and for a period
of two (2) years thereafter, Subcontractor shall maintain professional liability
insurance (including errors and omissions) and workers compensation insurance in
the amount required by statute and comprehensive general liability insurance
with coverage of at least one million dollars ($1,000,000) for bodily injury,
property damage or other losses with coverage of at least one million dollars
($1,000,000), in connection with the provision of Services by Subcontractor
pursuant to the terms of this Agreement. Subcontractor has provided Contractor
with Certificates of Insurance or self-insurance evidencing the above coverage
and shall provide Contractor with prompt written notice of any material change.
Contractor agrees that it has or shall obtain appropriate insurance with regard
the services it provides to its customer.
20. SURVIVAL. Sections 6, 7, 8, 10, 11, 12 and 15 hereof shall survive
any termination of this Agreement for any reason.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
WORLD COMMERCE ONLINE, INC. ANSWERTHINK CONSULTING GROUP, INC.
By: /s/ Robert H. Shaw By: /s/ Barry H. Atkins
------------------------------ -------------------------------
(Signature) (Signature)
Name: Robert H. Shaw Name: Barry H. Atkins
Title: Chief Executive Officer Title: Director
-8-
<PAGE> 9
RATE CHART
<TABLE>
<CAPTION>
DISCOUNT
TITLE STD RATE RATE
- ----- -------- --------
<S> <C> <C>
Consultant $150.00 $100.50
Senior Cons "B" $175.00 $117.25
Senior Cons "A" $185.00 $123.95
Manager $225.00 $150.75
Director $300.00 $200.00
Managing Director $400.00 $200.00
</TABLE>
<PAGE> 1
Exhibit 10.9
STOCK PURCHASE AGREEMENT
DATED AUGUST 26, 1999
BY AND AMONG
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation,
FRESH PRODUCTS NETWORK B.V.,
an entity organized under the laws of the Netherlands,
OMNIFLORA INTERNATIONAL LTD.,
an entity organized under the laws of the British Virgin Islands,
JOBO HOLDING B.V.,
an entity organized under the laws of the Netherlands,
AND
NILS VAN BEEK,
<PAGE> 2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is entered into as of
the 26th day of August, 1999, by and among WORLD COMMERCE ONLINE, INC., a Nevada
corporation (the "Purchaser"), FRESH PRODUCTS NETWORK B.V., an entity organized
under the laws of the Netherlands (the "Company"), OMNIFLORA INTERNATIONAL LTD.,
an entity organized under the laws of the British Virgin Islands ("Omniflora"),
JOBO HOLDING B.V., an entity organized under the laws of the Netherlands (the
"Stockholder") and NILS VAN BEEK, a citizen of the Netherlands ("van Beek").
RECITALS:
WHEREAS, the Stockholder owns all of the issued and outstanding shares
of common stock, par value 1 Euro per share, of the Company (the "Company Common
Stock"); and
WHEREAS, the Purchaser desires to acquire from the Stockholder, and the
Stockholder desires to sell or to cause to be transferred to the Purchaser, the
Company Common Stock, pursuant to the terms of this Agreement; and
WHEREAS, the Purchaser and the Company together with the Stockholder
have negotiated mutually acceptable terms and conditions for such acquisition,
pursuant to which the Company will become a wholly owned subsidiary of the
Purchaser and the Purchaser shall acquire the equity interest in the Company
previously represented by all of the Company Common Stock, as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby, the representations, warranties, covenants and agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Purchaser, the Company,
Omniflora, van Beek, and the Stockholder do hereby agree as follows:
ARTICLE I
Acquisition of the Company Common Stock
1.1 Acquisition of the Company Common Stock. Upon the terms and subject
to the conditions set forth in this Agreement, the Purchaser shall acquire the
Company Common Stock currently held by the Stockholder, which represents all of
the issued and outstanding shares of common stock of the Company. As
consideration for the Company Common Stock, the Stockholder shall receive the
consideration set forth in Section 1.2 below. In furtherance thereof, the
Stockholder shall, simultaneously with the execution of this Agreement, deliver
to the Purchaser the certificate(s) representing the Company Common Stock, duly
endorsed for transfer or accompanied by stock powers executed in blank for
transfer.
1.2 Acquisition Consideration. Pursuant to the terms and conditions of
Sections 1.3, 1.4, and 1.5, and upon the surrender of the certificate(s)
representing such Company Common Stock in accordance with the provisions of
Section 1.1 above: (i) the Stockholder and Omniflora shall each receive one-half
of the Acquisition Shares (as defined in Section 1.3 of this Agreement); (ii)
the Purchaser shall assume and become liable for the Assumed Liabilities (as
defined in Section 1.4 of this Agreement); and (iii) the Stockholder shall be
entitled to receive the Earn Out Shares (as defined in Section 1.5 of this
Agreement).
<PAGE> 3
1.3 Acquisition Shares and Agreed Value. At the Closing, the Purchaser
shall issue and deliver, or request its transfer agent to so deliver,
certificate(s) representing One Hundred Thousand shares of common stock, par
value of $.001 per share, of the Purchaser (the "Acquisition Shares").
1.4 Assumed Liabilities. At the Closing, the Purchaser shall assume and
become liable for the payment of the debt owed by the Company to van Beek
Bloemen B.V. in the amount of HFL 727.984,98 (the "Assumed Liabilities").
1.5 Earn Out Consideration. As additional consideration for the
consummation of the transactions contemplated by this Agreement, the Stockholder
shall be eligible to receive additional consideration (the "Earn Out") in an
amount equal to One Hundred Thousand shares of common stock, par value of $.001
per share, of the Purchaser (the "Earn Out Shares"). The Stockholder is eligible
to receive the Earn Out if, and only if, by December 31, 2000 (the "Earn Out
Period"), the Stockholder achieves the Milestone. For purposes of this section,
the term "Milestone" shall mean that at least HFL 30,000,000 in turnover from
growers and primary suppliers of cut flowers shall have been processed through
the Company's existing model, as such is revised in the ordinary course of
business. The Purchaser shall conduct an audit to determine if the Milestone has
been achieved within thirty (30) days after the end of the Earn Out Period. If
the Milestone has been achieved, the Purchaser shall issue and deliver to the
Stockholder a certificate representing the Earn Out Shares within ten (10)
business days following the date of receipt of the results of Purchaser's audit.
If the Milestone has not been achieved, the Purchaser shall deliver to the
Stockholder a statement that the Milestone has not been achieved along with a
copy of the audit. The Milestone shall be reduced to the extent the Purchaser
alters its business model after the date of this Agreement.
ARTICLE II
Representations and Warranties of
the Company, Omniflora, van Beek and the Stockholder
The Company, Omniflora, van Beek and the Stockholder, jointly and
severally, make the following representations and warranties to the Purchaser,
each of which shall be deemed material (and the Purchaser, in executing,
delivering and consummating this Agreement, has relied and will rely upon the
correctness and completeness of each of such representations and warranties):
2.1 Valid Corporate Existence; Qualification. The Company is duly
organized, validly existing and in good standing under the laws of the country
of the Netherlands. The Company has the corporate power to carry on its
businesses as now conducted and to own its assets. The Company is duly qualified
to conduct business and is in good standing as a foreign corporation in those
jurisdictions in which the Company is required to qualify in order to own its
assets or properties or to carry on its businesses as now conducted, except
where the failure to qualify would not have a material adverse effect on the
business of the Company taken as a whole, and there has not been any claim by
any other jurisdiction to the effect that the Company is required to qualify or
otherwise be authorized to do business as a foreign corporation therein. The
copies of the Company's good standing certificates or certificates of existence
(issued by the appropriate authority), Articles of Incorporation (certified by
the appropriate authority) and By-Laws (certified by the Secretary), as amended
to date, which constitute a part of Schedule 2.1 are true and complete copies of
those documents as now in effect. The minute books of the Company contain
accurate records of all meetings of its Boards of Directors and stockholders
since the date of incorporation, and accurately reflect all material
transactions referred to therein. At Closing, all such minute books and records
will be in the possession of the Company.
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<PAGE> 4
2.2 Capitalization. The authorized capital stock of the Company
consists of 100,000 shares of common stock, and 0 shares of preferred stock, par
value 1 Euro per share, of which there are 20,000 shares of common stock and no
shares of preferred stock issued and outstanding. All of such outstanding shares
are duly authorized, validly issued, fully paid and nonassessable. There are no
subscriptions, options, warrants, rights or calls or other commitments or
agreements to which the Company, Omniflora, van Beek or the Stockholder are a
party or by which such persons are bound, calling for the issuance, transfer,
sale or other disposition of any class of securities of the Company. There are
no outstanding securities of the Company convertible or exchangeable, actually
or contingently, into shares of common stock, or any other securities of the
Company.
2.3 No Subsidiaries. There are no corporations, partnerships or other
business entities controlled by the Company (collectively, "Subsidiaries"). As
used in this Agreement, "controlled by" means: (i) the ownership of not less
than fifty percent (50%) of the voting securities or other interests of a
corporation, partnership or other business entity; or (ii) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a corporation, partnership or other business entity,
whether through the ownership of voting shares, by contract or otherwise. The
Company has not made any investment in, and does not own, any capital stock of,
or any other proprietary interest in, any other corporation, partnership or
other business entity that is not reflected on its books and records.
2.4 Consents. There are no consents of governmental or other regulatory
agencies, foreign or domestic or of other parties required to be received by or
on the part of the Company, Omniflora, van Beek or the Stockholder to enable
such persons to enter into and carry out this Agreement in all material
respects.
2.5 Corporate Authority; Binding Nature of Agreement; Title to the
Company Common Stock, etc. The Company, Omniflora, van Beek and the Stockholder
have the power to enter into this Agreement and to carry out its or their
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by each of the the Company's, Omniflora's and the Stockholder's Board of
Directors and upon execution of this Agreement by the Company, Omniflora and the
Stockholder, no other corporate proceeding on the part of the Company, Omniflora
or the Stockholder, respectfully, is necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement constitutes the valid and binding agreement of the
Company, Omniflora, van Beek and the Stockholder and, assuming that this
Agreement constitutes the legal, valid and binding agreement of the Purchaser,
is enforceable in accordance with its terms subject to applicable bankruptcy,
reorganization, insolvency and similar laws affecting the rights of creditors
and subject to general principles of equity. Omniflora, van Beek and the
Stockholder represent and warrant with respect to the shares of Company Common
Stock that: (i) the Stockholder is the sole record and beneficial owner of such
shares free and clear of all manner of liens, charges, encumbrances, claims
restrictions and assessments whatsoever; and (ii) the Stockholder has good and
marketable title to such shares and the absolute and unqualified right to sell,
transfer and deliver such shares to the Purchaser.
2.6 Financial Statements. Attached hereto as Schedule 2.6 are the
unaudited financial statements (including Balance Sheet, Income Statement and
Statement of Cash Flows) for the Company as of July 31, 1999 (the "Financial
Statements") all of which fairly reflect, in all material respects, the
financial condition and results of operations of the Company as of the date
thereof. Without limitation of the foregoing, the Company does not have any
material liabilities, debts, or obligations, fixed or contingent, known or
unknown, except to the extent reflected in such financial statements.
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<PAGE> 5
2.7 Actions Since Financial Statements Date. Since the date of the
Financial Statements (the "Financial Statements Date"), the Company has not: (i)
issued or sold, or agreed to issue or sell any of its capital stock, options,
warrants, rights or calls to purchase such stock, any securities convertible or
exchangeable into such capital stock or other corporate securities, or effected
any subdivision or other recapitalization affecting its capital stock; (ii)
incurred any material absolute obligation or liability, except those arising in
the ordinary and usual course of its business that would normally be reflected
on the books of the Company; (iii) incurred any material contingent obligation
or liability, except those arising in the ordinary and usual course of its
business; (iv) discharged or satisfied any lien or encumbrance, except in the
ordinary and usual course of business, or paid or satisfied any liability,
absolute or contingent, other than liabilities as at the Financial Statements
Date in the ordinary and usual course of business; (v) made any wage or salary
increases or granted any bonuses other than wage and salary increases and
bonuses granted in accordance with its normal salary increase and bonus
policies; (vi) mortgaged, pledged or subjected to any lien or other encumbrance
any of its properties or assets, or permitted any of its property or assets to
be subjected to any lien or other encumbrance, except in the ordinary and usual
course of business; (vii) sold, assigned or transferred any of its properties or
assets, except in the ordinary and usual course of business; (viii) entered into
any material transaction not in the ordinary and usual course of business; (ix)
waived any rights of material value, or canceled, modified or waived any
indebtedness for borrowed money held by it, except in the ordinary and usual
course of business; (x) except in the ordinary and usual course of business made
any loans or advances to any person, or assumed, guaranteed, or otherwise become
responsible for the obligations of any person; or (xi) incurred any indebtedness
for borrowed money (except for endorsement, for collection or deposit of
negotiable instruments received in the ordinary and usual course of business).
To the extent that any moneys are outstanding under any line of credit of the
Company, all such funds were utilized in the ordinary and usual course of
business. Since the Financial Statements Date the Company has not declared, paid
or set aside any dividends (other than normal recurring dividends paid in the
ordinary course of business and in the same proportions as the prior year) or
other distributions or payments on its capital stock, or redeemed or
repurchased, or agreed to redeem or repurchase, any shares of its capital stock.
2.8 Absence of Material Changes. There has not been any material
change, whether or not adverse, in the assets, properties, operations or
financial condition of the Company and/or since the Financial Statements Date no
event has occurred, other than in the ordinary and usual course of business,
which could be reasonably expected to have a material effect upon the business
of the Company, and neither the Company nor the Stockholder knows of any
development or threatened development of a nature that will have, or which could
be reasonably expected to have, a material effect upon the business of the
Company or upon any of its assets, properties, operations or financial
condition, taken as a whole, including, without limitation, the loss of any
licenses or permits, suppliers, customers or employees, which loss would be of a
material nature.
2.9 Ownership of Assets; Trademarks, etc. The Company owns outright,
and has good and marketable title to all of its assets (including all computer
software and all source and object codes thereto, and all assets reflected in
the Financial Statements, except as the same may have been disposed of in the
ordinary course of business since the Financial Statements Date), free and clear
of all liens, mortgages, pledges, conditional sales agreements, restrictions on
transfer or other encumbrances or ownership rights. The Company has the valid
right to utilize all intellectual property utilized in its business operations.
The Company has no interest as owner or licensee in any patents, copyrights,
trademarks or trade names relating to any property utilized by the Company in
its business operations. No other person, firm or corporation has any
proprietary or other interest in any such property. The Company is not a party
to or bound by any license or agreement requiring the payment to any person,
firm or corporation of any royalty. To the knowledge of the Stockholder the
Company is not infringing upon any patent, copyright, trade name or trademark or
otherwise violating the rights of any third party with respect thereto, and no
proceedings have
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<PAGE> 6
been instituted or are threatened and no claim has been received by the Company
or the Stockholder alleging any such violation.
2.10 Insurance. The Company maintains, has in full force and effect,
and has paid all premiums in respect of policies of fire, liability and other
forms of insurance held by the Company and covering its assets and business
against such hazards and in such amounts as are normal and customary for
businesses of similar size, scope and nature. Neither the Company, Omniflora,
van Beek nor the Stockholder knows of any state of facts, or of the occurrence
of any event which might reasonably: (i) form the basis for a valid claim for
any material damages against the Company not fully covered by insurance for
liability on account of any express or implied warranty or tortious omission or
commission, or (ii) result in a material increase in insurance premiums of the
Company on a retroactive or prospective basis. Neither the Company nor the
Stockholder knows of any state of facts concerning any claim which an employee
may have against the Company that is not fully covered by insurance (including
any medically related illness).
2.11 Litigation, Compliance with Laws. There are no actions, suits,
proceedings or governmental investigations relating to the Company or to any of
its properties, assets or business filed or commenced and pending or, to the
knowledge of the Company, Omniflora, van Beek and the Stockholder, threatened,
or any order, injunction, award or decree outstanding, against the Company or
against or relating to any of its properties, assets or business; and neither
the Company, Omniflora, van Beek nor the Stockholder knows of any basis for any
such action, suits or proceedings which governmental investigations, orders,
injunctions or decrees could reasonably be expected to have a material adverse
effect on the business, financial condition or operations of the Company. The
Company is not in violation of any domestic or foreign law, regulation,
ordinance, order, injunction, decree, award, or other requirement of any
governmental body, court or arbitrator relating to its properties, assets or
business, the violation of which would have a material adverse effect on the
Company.
2.12 Real Property. The Company does not own any real estate or any
interest therein, except to the extent of its interest as lessee under the lease
for business premises (the "Lease", a true and complete copy of which is
attached hereto as Schedule 2.12). The Company (and, to the best of the
Stockholder's knowledge, the landlord thereunder) is presently in compliance
with all of its obligations under the Lease, and the premises leased thereunder
are in good condition (reasonable wear and tear accepted), and are adequate for
the operation of the business of the Company as presently conducted. No consent
of the landlord under the lease which has not previously been obtained is
required in connection with the transactions contemplated by this Agreement.
2.13 Agreements and Obligations, Performance. The Company is not a
party to, nor is bound by any: (i) written or oral contract, arrangement,
commitment or understanding which involves aggregate annual payments in excess
of One Thousand Dollars ($1,000) that cannot be canceled on thirty (30) days or
less notice without penalty or premium or any continuing obligation or
liability; (ii) contractual obligation or contractual liability of any kind to
the Stockholder; (iii) contract, arrangement, commitment or understanding with
its customers, suppliers or the Stockholder or any officer, employee,
shareholder, director, representative or agent thereof for the repurchase of
products, (other than warranty liability), sharing of fees, the rebating of
charges to such customers, bribes, kickbacks from such customers or other
similar arrangements; (iv) contract for the purchase or sale of any materials,
products or supplies which contain, or which commits or will commit it for a
fixed term; (v) contract of employment with any officer, employee, consultant or
independent contractor not terminable at will without penalty or premium or any
continuing obligation or liability; (vi) deferred compensation bonus or
incentive plan or agreement not cancelable at will without penalty or premium or
any continuing obligation or liability; (vii) union or other collective
bargaining agreement; (viii) agreement, commitment or understanding relating to
indebtedness for borrowed money other than trade payables incurred in the
ordinary course of business and reflected on
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<PAGE> 7
the books and records of the Company; (ix) contract which, by its terms,
requires the consent of any party thereto to the consummation of the
transactions contemplated hereby; (x) contract containing covenants limiting the
freedom of the Company to engage or compete in any line of business or with any
person in any geographical area, except for manufacturer's representatives or
distribution agreements; (xi) contract or option relating to the acquisition or
sale of any business; (xii) voting trust agreement or similar stockholder's
agreement; (xiii) option for the purchase of any asset, tangible or intangible;
or (xiv) other contract, agreement, commitment or understanding which materially
and adversely affects any of its properties, assets or business, whether
directly or indirectly, or which was entered into other than in the ordinary
course of business (all of the above, collectively, the "Listed Agreements").
The Company has in all material respects performed all obligations required to
be performed by it to date under all of the Listed Agreements, is not in default
in any material respect under any of the Listed Agreements, and has received no
notice of any default or alleged default hereunder which has not heretofore been
cured or which notice has not heretofore been withdrawn. Neither the Company nor
the Stockholder knows of any material default under any of the Listed Agreements
by any other party thereto or by any other person, firm or corporation bound
thereunder.
2.14 Accounts and Notes Receivable. Schedule 2.14 sets forth a true and
correct copy of all accounts and notes receivable of the Company as of the date
of this Agreement. All of the accounts and notes receivable reflected in the
Financial Statements of the Company were or will have been created in the
ordinary course of its business, from the sale of services or goods, and neither
the Company nor the Stockholder knows of any valid defense or right of set-off
to the rights of the Company to collect such accounts receivable in the full
amounts shown.
2.15 Permits and Licenses. Schedule 2.15 sets forth all permits,
licenses, orders, franchises and approvals from all domestic and foreign
governmental regulatory bodies held by the Company. The Company has all permits,
licenses, orders, franchises and approvals of all domestic and foreign
governmental or regulatory bodies, whose failure to be held would materially and
adversely affect the Company's ability to carry on its business as presently
conducted and such permits, licenses, orders, franchises and approvals are in
full force and effect, and no suspension or cancellation of any of such other
permits, licenses, etc. is pending or to the knowledge of the Company
threatened; and the Company is in compliance in all material respects with all
requirements, standards and procedures of the domestic and foreign governmental
bodies which have issued such permits, licenses, orders, franchises and
approvals. Schedule 2.15 also sets forth a brief description (including all
vehicle identification numbers) of all vans, automobiles, trucks or other
vehicles owned or leased by the Company and the jurisdiction in which such
vehicle is registered or titled.
2.16 Banking Arrangements. Schedule 2.16 sets forth the name of each
bank in or with which the Company has an account, credit line or safety deposit
box, and a brief description of each such account, credit line or safety deposit
box, including the names of all persons currently authorized to draw thereon or
having access thereto; and the names of all persons, if any, now holding powers
of attorney from the Company and a summary statement of the terms thereof.
2.17 Interest in Assets. Neither Omniflora, van Beek, the Stockholder
nor any affiliate(s) of Omniflora, van Beek or the Stockholder own any property
or rights, tangible or intangible, used in or related, directly or indirectly,
to the business of the Company. As used herein, "affiliate" means any person,
corporation or other entity (other than the Company) which directly or
indirectly controls, is controlled by or is under common control with another
person or entity.
2.18 Employee Benefit Plans. The Company does not have any policies or
plans, whether written or not, that provide for health, dental or vision
benefits, vacation benefits, severance benefits, leave
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<PAGE> 8
rights or other benefits to its employees. No payment required to be made to any
employee associated with the Company as a result of the transactions
contemplated hereby under any contract or otherwise.
2.19 No Breach. Neither the execution and delivery of this Agreement
nor compliance by the Company, Omniflora, van Beek and the Stockholder with any
of the provisions hereof nor the consummation of the transactions contemplated
hereby, will:
(a) violate or conflict with any provision of the Articles of
Incorporation or By-laws of the Company, Omniflora or the Stockholder;
(b) except for manufacturer's representatives and distribution
agreements, violate or, alone or with notice or the passage of time, result in
the material breach or termination of, or otherwise give any contracting party
the right to terminate, or declare a default under, the terms of any material
agreement or, other material document or undertaking, oral or written to which
any of the Company, Omniflora, van Beek or the Stockholder is a party or by
which any of them or any of their respective properties or assets may be bound
(except for such violations, conflicts, breaches or defaults as to which
required waivers or consents by other parties have been, or will, prior to the
Closing, be, obtained);
(c) result in the creation of any material lien, security
interest, charge or encumbrance upon any of the material properties or assets of
the Company, Omniflora, van Beek or the Stockholder or pursuant to the terms of
any such agreement or instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, the Company, Omniflora, van Beek or the Stockholder or
upon their respective properties or assets; or
(e) to the best of the Company's, Omniflora's, van Beek's or
the Stockholder's knowledge, violate any law or regulation of any jurisdiction
relating to the Company or the Stockholder or any of their securities, assets or
properties.
2.20 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly with the
Purchaser by the Company, van Beek and the Stockholder without the intervention
of any broker, finder, investment banker or other third party. Neither the
Company, van Beek nor the Stockholder has engaged, consented to, or authorized
any broker, finder, investment banker or other third party to act on its or his
behalf, directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement, and van Beek and the Stockholder
agree to indemnify the Purchaser against, and to hold it harmless from any claim
for brokerage or similar commission or other compensation which may be made
against the Purchaser by any third party in connection with any transactions
contemplated hereby which claim is based upon any action by the Company, van
Beek or the Stockholder.
2.21 Labor Discussions. The Company is not, and nor has it ever been, a
party to any agreement, collective bargaining or otherwise, with any party
regarding the rates of pay or working conditions of any of the Company's
employees, nor obligated under any agreement to recognize or bargain with any
labor organization or union, nor involved in any labor discussions with any unit
or group seeking to become the bargaining unit for any of its employees.
2.22 Change of Name. The Company has not conducted business under any
name other than Fresh Products Network B.V.
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<PAGE> 9
2.23 Environmental Matters.
(i) The Company has not used, generated, operated, processed,
distributed, recycled, transported, used, treated, stored, handled, emitted,
discharged, released or disposed of (or caused any person or entity to do any of
the foregoing or assisted any person or entity in doing any of the foregoing)
any Hazardous Materials on the property used by the Company, or any other
property, except for those Hazardous Materials commonly used for office and
administrative purposes, but only so long as the quantities thereof are in
compliance with Environmental Laws, and do not pose a threat to public health of
the environment.
For purposes of this Section 2.23, the following terms shall
have the following meanings:
"Environmental Law" means any federal, state or local law,
statute, ordinance, code, rule, regulation, license, authorization, decision,
order, injunction, decree, or rule of common law, and any judicial
interpretation of any of the foregoing, which pertains to health, safety, any
Hazardous Materials, or the environment (including but not limited to ground or
air or water or noise pollution or contamination, natural resources, and
underground or above ground tanks) and shall include without limitation, the
Solid Waste Disposal Act, 42 U.S.C. ss. 6901 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. ss.
9601 et seq. ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"); the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Medical Waste
Tracking Act, 42 U.S.C. ss. 6992 et. seq.; the Occupational Safety and Health
Act 29 U.S.C. ss. 651-678; and the Safe Drinking Water Act, 42 U.S.C. ss.300f et
seq.
"Hazardous Materials" means any substance, whether solid,
liquid or gaseous which is listed, defined or regulated as a "hazardous
substance", "hazardous waste", "hazardous constituent", "Medical waste" or
"solid waste", or otherwise classified as a hazardous, toxic or regulated
substance, in or pursuant to any Environmental Law; or which is or contains
asbestos, radon, methane, infectious waste, any polychlorinated biphenyl, urea
formaldehyde foam insulation explosive or radioactive material, or motor fuel or
other petroleum hydrocarbons; or which causes or poses a threat to cause
contamination or a nuisance, or a hazard to the environment or to the health or
safety of persons.
"On" or "on", means "on, in or under, at, above or about."
"Environmental Permit" means all permits authorizations or
certifications required by any Environmental Law to occupy, operate, use or
conduct activities at property used by the Company or to transport, recycle or
dispose of materials off-site.
"Environmental Claim" means any investigative, enforcement,
cleanup, removal, containment, remedial or other private or governmental or
regulatory action including, but not limited to any information request letters,
at any time threatened, instituted or completed pursuant to any applicable
Environmental Law, against the Company or against or with respect to property
used by the Company, and any claim at any time threatened or made by any person
against the Company or against or with respect to property used by the Company,
or any prior use, operation or ownership of property used by the Company,
relating to damage, contribution, cost recovery, compensation, loss or injury
resulting from or in any way arising in connection with any Hazardous Material
or any Environmental Law.
(ii) There are no underground storage tanks, sumps or
cesspools on the property used by the Company;
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<PAGE> 10
(iii) The Company has received no notice and has no knowledge
of any Environmental Claim relating to any property used by the Company or the
business operated by the Company;
(iv) The Company has received and is in compliance with all
applicable Environmental Permits.
2.24 Untrue or Omitted Facts. No representation, warranty or statement
by the Company, Omniflora, van Beek or the Stockholder in this Agreement
contains any untrue statement of a material fact, or omits or will omit to state
a fact necessary in order to make such representations, warranties or statements
not materially misleading. Without limitation of the foregoing, there is no fact
known to the either the Company, Omniflora, van Beek or the Stockholder that has
had, or which may be reasonably expected to have, a material adverse effect on
the Company or any of its assets, properties, operations or businesses and that
has not been disclosed in writing to the Purchaser.
2.25 Investment Representation. Omniflora and the Stockholder each
hereby represent that they understand that the transaction contemplated by this
Agreement is to be carried out as a transaction exempt from registration under
the Securities Act of 1933, as amended (the "Act") and, accordingly neither the
Acquisition Shares nor the Earn Out Shares (collectively, the "Shares") will
have been registered under the Act at the time of Closing. Omniflora and the
Stockholder each further represent that they are acquiring the Shares for
investment purposes only and not with a view to or for resale in connection with
any distribution of the Shares, nor with any present intention of distribution
(within the meaning of the Act) of the Shares. Omniflora and the Stockholder
each understands that because the Shares will not have been registered under the
Act, the Purchaser will not permit the transfer of such Shares without
registration under the Act, or upon the issuance to the Purchaser of a favorable
opinion of its counsel or of the submission to the Purchaser of such other
evidence as may be satisfactory to counsel for the Purchaser, in either case, to
the effect that any such transfer, whether pursuant to Rule 144 of the Act or
otherwise, shall not be in violation of the Act, and any applicable state
securities laws, and that the share certificates representing such Shares will
be issued with a restrictive legend providing notice of such restriction.
2.26 Access to Information. Omniflora and the Stockholder each hereby
represent and warrant to the Purchaser that they have had an opportunity to ask
questions of, and receive answers from, appropriate officers and representatives
of the Purchaser concerning the terms and conditions of the issuance of the
Shares and to obtain any additional information concerning the Purchaser which
they have requested. In addition, Omniflora and the Stockholder each represent
and warrant that the Purchaser has made available for inspection by them various
documents connected with the Purchaser's business and has not refused in any way
to permit them to inspect any document requested to be inspected by them.
ARTICLE III
Representations and Warranties of Purchaser
The Purchaser makes the following representations and warranties to the
Company, Omniflora, van Beek and the Stockholder, each of which shall be deemed
material (and the Company, Omniflora, van Beek and the Stockholder, in
executing, delivering and consummating this Agreement, have relied and will rely
upon the correctness and completeness of each of such representations and
warranties):
3.1 Valid Corporate Existence; Qualification. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Purchaser has the
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<PAGE> 11
corporate power to carry on its business as now conducted and to own its assets.
The Purchaser is duly qualified to conduct business and is in good standing as a
foreign corporation in those jurisdictions in which it is required to qualify in
order to own its assets or properties or to carry on its business as now
conducted, and there has not been any claim by any other jurisdiction to the
effect that the Purchaser is required to qualify or otherwise be, authorized to
do business as a foreign corporation therein.
3.2 Consents. There are no consents of governmental or other regulatory
agencies, foreign or domestic, or of other parties, other than the consent of
Interprise Technology Partners, L.P., required to be received by or on the part
of the Purchaser to enable the purchaser to enter into and carry out this
Agreement in all material respects.
3.3 Corporate Authority; Shares Validly Issued; Binding Nature of
Agreement. The Purchaser has the power to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated have been duly authorized by
the Purchaser's Board of Directors and no other corporate proceeding on the part
of the Purchaser will be necessary to authorize the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement constitutes the valid and binding agreement of the Purchaser and,
assuming that this Agreement constitutes the legal, valid and binding agreement
of the other parties, is enforceable in accordance with its terms subject to
applicable bankruptcy, insolvency and similar laws affecting the rights of
creditors and subject to general principles of equity. The Shares have been duly
authorized and when issued shall be outstanding, fully paid and nonassessable.
3.4 No Breach. Provided all required consents have been obtained,
neither the execution and delivery of this Agreement nor compliance by the
Purchaser with any of the provisions hereof nor the consummation of the
transactions contemplated hereby, will:
(a) violate or conflict with any provisions of the Certificate
of Incorporation or By-Laws of the Purchaser;
(b) violate or, alone or with the passage of time, result in
the material breach or termination of, or otherwise give any contracting party
the right to terminate, or declare a default under, the terms of any agreement
or other document or undertaking, oral or written to which the Purchaser is a
party or by which it or any of its properties or assets may be bound (except for
such violations, conflicts, breaches or defaults as to which required waivers or
consents by other parties have been, or will, prior to Closing, be, obtained);
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Purchaser or
pursuant to the terms of any such agreement or, instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon the Purchaser or upon its properties or assets; or
(e) violate any law or regulation of any jurisdiction relating
to the Purchaser or any of its securities, assets or properties.
3.5 Untrue or Omitted Facts. No representation, warranty or statement
by the Purchaser in this Agreement contains any untrue statement of a material
fact, or omits or will omit to state a fact necessary in order to make such
representations, warranties or statements not materially misleading.
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3.6 Tax Free Reorganization. Notwithstanding anything to the contrary
contained herein, the Purchaser makes no representations or warranties to the
Company or the Stockholder concerning whether this transaction will qualify as a
tax free reorganization under the Code.
ARTICLE IV
Additional Agreements
4.1 Consulting Agreement. At the Closing, the Stockholder and the
Purchaser shall each have executed a Consulting Agreement substantially in the
form attached hereto as Exhibit 4.1.
4.2 Warrant. At the Closing, the Purchaser shall have executed a
warrant for the purchase of common stock of the Purchaser in the name of van
Beek substantially in the form attached hereto as Exhibit 4.2.
ARTICLE V
Closing
5.1 Conditions to Closing. The delivery of the items to be delivered by
the Company and the Stockholder as provided in Section 5.3 hereof shall
constitute the conditions precedent to the obligation of the Purchaser to
complete the acquisition of the Company Common Stock contemplated by this
Agreement (the "Closing"), and the delivery of the items to be delivered by the
Purchaser as provided in Section 5.4 hereof shall constitute the conditions
precedent to the obligation of the Company and the Stockholder to Close. The
date on which the Closing shall be deemed to have occurred is referred to in
this Agreement as the "Closing Date."
5.2 Location, Time and Date. The location and time for the delivery of
the items to be delivered by the parties pursuant to this Article V shall be at
such place and time as is agreed to by the parties hereto, but in no event shall
the Closing occur later than September 30, 1999.
5.3 Items to be Delivered by the Company and the Stockholder. At the
Closing, the Company and the Stockholder will deliver or cause to be delivered
to the Purchaser:
(a) An acknowledgement by a notary or other individual
satisfactory to the Purchaser, or some form of documentation satisfactory to the
Purchaser that the Company has transferred the Company Common Stock then
representing one hundred percent (100%) of the outstanding shares of Company
Common Stock to the Purchaser; and
(b) A certificate signed by the Company, Omniflora, van Beek
and the Stockholder representing that: (i) all representations and warranties of
the Company, Omniflora, van Beek and the Stockholder contained in this Agreement
and in any written statement, Exhibit, certificate or schedule delivered
pursuant hereto or in connection with the transactions contemplated hereby shall
be true and correct in all material respects as at the Closing Date, as if made
at the Closing and as of the Closing Date; and (ii) the Company, Omniflora, van
Beek and the Stockholder shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by each of them prior to or at the Closing; and
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<PAGE> 13
(c) Such other documents and certificates as are required to
be delivered by the Company and the Stockholder pursuant to the provisions of
this Agreement or as reasonably requested by the Purchaser.
5.4 Items to be Delivered by the Purchaser. At the Closing, the
Purchaser will deliver or cause to be delivered to Omniflora, van Beek and the
Stockholder:
(a) The certificate for the Acquisition Shares due Omniflora,
and confirmation of issuance of the certificate for Stockholder's Acquisition
Shares, subject to Purchaser's retention thereof under this Agreement;
(b) The Warrant required by Section 4.2; and
(c) Such other documents and certificates as are required to
be delivered by the Purchaser pursuant to the provisions of this Agreement or as
reasonably requested by the Stockholder.
ARTICLE VI
Survival of Representations; Indemnification
6.1 Survival. The parties hereto agree that their respective
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing for a period of four (4) years from the
Closing Date (the "Indemnification Period"). To the extent that an Indemnified
Party (as hereinafter defined) asserts in writing a claim for Damages (as
hereinafter defined) against an Indemnifying Party (as hereinafter defined)
prior to the expiration of the Indemnification Period, which claim reasonably
identifies the basis for the claims and the amounts of any reasonably
ascertainable damages, the Indemnification Period shall be extended for such
claim until such claim is resolved, subject to the limitations hereinafter
provided.
6.2 Indemnification by Omniflora and the Stockholder. Omniflora and the
Stockholder agree to save, defend and indemnify the Company and the Purchaser,
their officers, directors, employees and agents against and hold them harmless
from any and all liabilities, of every kind, nature and description, fixed or
contingent (including, without limitation, reasonable counsel fees and expenses
in connection with any action, claim or proceeding relating to such liabilities)
("Damages") arising from the breach of any of the representations, warranties,
covenants or agreements contained herein, or arising from or in connection with,
in any way, any Hazardous Materials set forth in Schedule 2.23, and the
representations, warranties, covenants or agreements of Omniflora or the
Stockholder contained in the documents executed by the Stockholder in connection
herewith, which arise during and the basis for which is made during the
Indemnification Period, including, without limitation, any tax liabilities to
the extent not so reflected or reserved against in the Financial Statements. The
Purchaser shall be entitled to set-off against the Earn Out and the Earn Out
Shares any indemnity claims which may arise under this Agreement; provided,
however, the Purchaser's right to indemnification shall in no way be limited to
the amount, if any, of such set-off. AS COLLATERAL TO SECURE THE PERFORMANCE OF
THESE OBLIGATIONS, STOCKHOLDER ALSO PLEDGES, GRANTS AND CONVEYS TO PURCHASER A
SECURITY INTEREST IN STOCKHOLDER'S (JOBO) 50,000 ACQUISITION SHARES, WHICH SHALL
BE PERFECTED BY PURCHASER'S RETAINING POSSESSION OF THE CERTIFICATE REPRESENTING
THE ACQUISITION SHARES, UNTIL THE EARLIER OCCURS OF: (i) THE MILESTONES
DESCRIBED ABOVE IN SECTION 1.5 ARE ACHIEVED; OR (ii) ONE HUNDRED EIGHTY(180)
DAYS ELAPSES FROM THE CLOSING DATE; AT WHICH TIME THE SECURITY INTEREST SHALL BE
DISCHARGED AND THE CERTIFICATE REPRESENTING THE ACQUISITION SHARES SHALL BE
DELIVERED TO
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<PAGE> 14
STOCKHOLDER, IF PURCHASER HAS NOT PREVIOUSLY IDENTIFIED AND NOTIFIED STOCKHOLDER
OF ANY BREACH FOR WHICH PURCHASER WOULD BE ENTITLED TO INDEMNIFICATION.
6.3 Indemnification by the Purchaser. The Purchaser agrees to save,
defend and indemnify Omniflora, van Beek and the Stockholder against and hold
them harmless from any and all Damages arising from the breach of any of the
Purchaser's representations, warranties, covenants or agreements contained
herein or the documents executed by Purchaser in connection herewith, which
arise during the Indemnification Period.
6.4 Nature of Liability of Omniflora and the Stockholder. Each of the
indemnity obligations of Omniflora and the Stockholder contained in this
Agreement are joint and several.
6.5 Limitations of Liability.
6.5.1 Liability of the Stockholder. Upon a Final Determination
(as provided in Section 6.5.3) of the amount of any claim for Damages made
against the Stockholder by the Purchaser, the Purchaser shall be entitled to
recover the amount of such Damages as finally determined.
6.5.2 Liability of the Purchaser. Upon a Final Determination
(as provided in Section 6.5.3) of the amount of any claim for Damages made
against the Purchaser by the Stockholder, the Stockholder shall be entitled to
recover the amount of such Damages as finally determined.
6.5.3 Final Determination. For the purposes of this Section
6.5, a Final Determination shall exist when: (i) the parties agree upon the
amount; or (ii) a court of competent jurisdiction shall have made a Final
Determination with respect thereto and appeal therefrom shall not have been
taken within thirty (30) days from the date of such determination, or such
greater or lesser time as a court of competent jurisdiction shall require. The
asserting party will assign to the other party any claims against which the
asserting party has been indemnified and has been paid as provided herein, as to
which there may be claims against others, and the other party in all respects
shall be subrogated to the rights of the asserting party in connection
therewith.
6.6 Defense of Claims. Each party entitled to indemnification under
this Article VI (the "Indemnified Party") agrees to notify the party required to
provide indemnification (the "Indemnifying Party") with reasonable promptness of
any claim asserted against it in respect of which the Indemnifying Party may be
liable under this Agreement, which notification shall be accompanied by a
written statement setting forth the basis of such claim and the manner of
calculation thereof. The failure of the Indemnified Party to promptly give
notice shall not preclude such Indemnified Party from obtaining indemnification
under this Article VI, except to the extent, and only to the extent, that the
Indemnifying Party's failure actually prejudices the rights or increases the
liabilities and obligations of the Indemnifying Party. The Indemnifying Party
shall have the right, at its election, to defend or compromise any such claim at
their own expense with counsel of their choice; provided, however, that: (i)
such counsel shall have been approved by the Indemnified Party prior to
engagement, which approval shall not be unreasonably withheld or delayed; (ii)
the Indemnified Party may participate in such defense, if it so chooses with its
own counsel and at its own expense; and (iii) any such defense or compromise
shall be conducted in a manner which is reasonable and not contrary to the
Indemnified Party's interest. In the event the Indemnifying Party does not
undertake to defend or compromise, the Indemnifying Party shall promptly notify
the Indemnified Party of its intention not to undertake to defend or compromise
the claim.
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<PAGE> 15
ARTICLE VII
Miscellaneous Provisions
7.1 Expenses. Except as otherwise expressly provided or set forth in,
or required by, this Agreement, the Purchaser, the Company, Omniflora, van Beek
and the Stockholder shall each bear their own expenses in connection herewith.
7.2 Modification, Termination or Waiver. This Agreement may be amended,
modified, or superseded, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, but only by a written instrument
executed by the party waiving compliance. The failure of any party at any time
or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same.
7.3 Publicity. The parties agree that no publicity, release or other
public announcement concerning the transactions contemplated by this Agreement
shall be issued by any party other than the Purchaser.
7.4 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either be: (i) delivered personally;
(ii) mailed, certified or registered, postage prepaid; (iii) sent by overnight
courier delivery service, receipt acknowledged, fees prepaid; or (iv)
transmitted by facsimile transmission to a telephone number as to which one
party notifies the other. Notice shall be deemed given when so delivered
personally, or if mailed, five (5) days after the date of mailing, or if
deposited with a courier service, two (2) days after such deposit, addressed as
follows
If to the Purchaser, to: World Commerce Online, Inc.
9677 Tradeport Drive
Orlando, Florida 32827
Attn: Robert Shaw
President
With a copy to: World Commerce Online, Inc.
9677 Tradeport Drive
Orlando, Florida 32827
Attn: Tucker H. Byrd, Esq.
General Counsel
If to the Stockholder, to: Nils van Beek
Wilgenlaan 9
1431 HT Adsmeer, Netherlands
If to the Omniflora, to: Andre Schmid
P.O. Box 56038
Nairobi, Kenya
If Notice is provided by facsimile it shall be deemed given upon confirmation of
transmission. The parties may change the persons and addresses to which the
notices or other communications are to be sent by giving written notice of any
such change in the manner provided herein for giving notice.
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<PAGE> 16
7.5 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto;
provided, however, that no assignment of any rights or delegation of any
obligations provided for herein may be made by Omniflora, van Beek or the
Stockholder without the express written consent of the Purchaser.
7.6 Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all of the negotiations, understandings and
representations (if any) made by and between such parties.
7.7 Exhibits. All exhibits or schedules annexed hereto (the "Exhibits")
are expressly made a part of this Agreement as fully as though completely set
forth herein, and all references to this Agreement herein or in any of such
Exhibits shall be deemed to refer to and include all such Exhibits.
7.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the local laws of the State of Florida applicable to agreements
to be executed and performed wholly within said state without giving effect to
its conflicts of laws provisions. The parties further agree that in any dispute
between them relating to this Agreement, exclusive jurisdiction shall be in the
trial courts located within Orange County, Florida, any objections as to
jurisdiction or venue in such court being expressly waived.
7.9 Section Headings. The section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
7.10 Severability. The invalidity or unenforceability of any term or
provision of this Agreement shall in no way impair or affect the balance
thereof, which shall remain in full force and effect.
7.11 Attorneys' Fees. In the event any litigation or controversy arises
out of or in connection with this Agreement between the parties hereto, the
prevailing party in such litigation or controversy shall be entitled to recover
from the other party or parties all reasonable attorneys' fees, expenses and
suit costs, including those associated with any appellate or post-judgment
collection proceeding.
7.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
7.13 Recitals. The recitals set forth at the beginning of this
Agreement are true and correct and incorporated by reference into the body of
this Agreement.
7.14 Definition of Knowledge. Whenever a statement of any party to this
Agreement is qualified by that party's "knowledge", "knowledge" means the actual
knowledge of the person making such statement at the time or times that such
statement is made. If the statement is made by a corporation, the actual
knowledge of the corporation's officers and directors is imputed to the
corporation; otherwise, the actual knowledge of a person shall not be imputed to
any other person.
7.15 Benefits to Others. The representations, warranties and covenants
contained in this Agreement are for the sole benefit of the parties hereto and
their successors and permitted assigns, and they shall not confer and are not
intended to confer any rights on any other persons.
[SIGNATURES FOLLOW ON NEXT PAGE]
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<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first above written.
"PURCHASER":
WORLD COMMERCE ONLINE, INC.
By: /s/ Robert Shaw
--------------------------------
Robert Shaw
President
"COMPANY":
FRESH PRODUCTS NETWORK B.V.
By: /s/ Nils van Beek
--------------------------------
Nils van Beek
President
"OMNIFLORA":
OMNIFLORA INTERNATIONAL LTD.
By: /s/ Andre Schmid
-------------------------------
Andre Schmid
"STOCKHOLDER":
JOBO HOLDING B.V.
By: /s/ Nils van Beek
-------------------------------
Nils van Beek
/s/ Nils van Beek
-------------------------------
Nils van Beek
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<PAGE> 18
LIST OF SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
-------- -----------
<S> <C>
Schedule 2.1 Articles and Bylaws
Schedule 2.6 Financial Statements
Schedule 2.12 Real Property
Schedule 2.14 Accounts and Notes Receivable
Schedule 2.15 Permits and Licenses
Schedule 2.16 Banking Arrangements
</TABLE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
Exhibit 4.1 Consulting Agreement
Exhibit 4.2 Warrant
</TABLE>
<PAGE> 19
SCHEDULE 2.1
ARTICLES AND BYLAWS
(SEE ATTACHED)
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<PAGE> 20
SCHEDULE 2.6
FINANCIAL STATEMENTS
(SEE ATTACHED)
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<PAGE> 21
SCHEDULE 2.12
REAL PROPERTY
(NONE)
-4-
<PAGE> 22
SCHEDULE 2.14
ACCOUNTS AND NOTES RECEIVABLE
(SEE FINANCIAL STATEMENTS - SCHEDULE 2.6)
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<PAGE> 23
SCHEDULE 2.15
PERMITS AND LICENSES
(SEE ATTACHED)
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<PAGE> 24
SCHEDULE 2.16
BANKING ARRANGEMENTS
BANKADRES F.P.N. BV:
RABOBANK
P.O. BOX 259
1430 BG AALSMEER
ACCT. NR. 30.01.57.630
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<PAGE> 25
EXHIBIT 4.1
CONSULTING AGREEMENT
(SEE ATTACHED)
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<PAGE> 26
EXHIBIT 4.2
WARRANT
(SEE ATTACHED)
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<PAGE> 1
EXHIBIT 10.10
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), is made and entered into
as of the 26th day of August, 1999, by and between WORLD COMMERCE ONLINE, INC.,
a Nevada corporation, with an address at 9677 Tradeport Drive, Orlando, Florida
32827 ("Corporation"), and JOBO HOLDING B.V., an entity organized under the
laws of the Netherlands, with an address at Wilgenlaan 9, 1431 HT Adsmeer,
Netherlands ("Consultant").
R E C I T A L S:
WHEREAS, Consultant was the sole shareholder of the common stock of
Fresh Products Network B.V., an entity organized under the laws of the
Netherlands ("FPN"); and
WHEREAS, FPN is an e-commerce trading system methodology designed to
sell cut flowers from growers to resellers via the world wide web; and
WHEREAS, Consultant has agreed to sell its interest in FPN to
Corporation pursuant to that certain Stock Purchase Agreement dated August 26,
1999 by and among Corporation, FPN, Consultant, Omniflora International Ltd.
and Nils van Beek (the "Stock Purchase Agreement"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Corporation and
Consultant agreed to enter into this Agreement; and
WHEREAS, Corporation is engaged in providing seamless and secure
networks on the world wide web to organizations and industries to enable them
to do business-to-business and business-to-consumer transactions worldwide (the
"Business"), and has invested substantial time and money to develop and build
substantial relationships with specific prospective or existing customers and
other individuals and businesses with which it does business;
WHEREAS, Consultant desires to be retained by Corporation and
currently has or will have access to Corporation's Confidential Information
(hereinafter defined in Section 2(a));
WHEREAS, Consultant executes this Agreement, intending Corporation
rely on the terms, covenants, and provisions specifically set forth and stated
herein, and expressly to induce Corporation to employ Consultant; and
WHEREAS, Corporation, as an express condition precedent to retaining
Consultant, requires that Consultant execute this Agreement wherein Consultant
expressly covenants and agrees to maintain the confidentiality of the
Confidential Information and not to engage in conduct competitive to the
Corporation.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and
<PAGE> 2
sufficiency of which are hereby acknowledged, Consultant hereby covenants and
agrees as follows:
1. RECITALS. The foregoing recitals are true and correct and
form a part of this Agreement.
2. TERM AND DUTIES. Corporation hereby retains Consultant for
period beginning on August 30, 1999 ("Starting Date"), and ending four (4)
years from the Starting Date (the "Term"), as a general advisor and consultant
to management on matters pertaining to sales and product marketing for Europe,
Africa and the Middle East, and such other matters pertaining to the Business
as may, from time-to-time, be assigned by or under the authority of
Corporation's Chief Marketing Officer or President. Consultant's duties will
include, but not be limited to, the following:
(a) Defining a sales and marketing plan for Europe,
Africa and the Middle East;
(b) Recruit, hire and train a sales and marketing team;
(c) Work with and assist Corporation's management team
to accomplish Corporation's goals;
(d) Work closely with Jaap Kras on a daily basis to
insure the overall success of Corporation in Europe,
Africa and the Middle East.
3. COMPENSATION.
3.1 Base Compensation. The Consultant shall receive base
compensation at the annual rate of One Hundred Fifty Thousand Dollars $150,000
(the "Base Compensation") during the Term, with such Base Compensation payable
in monthly installments.
3.2 Bonuses. At the end of each fiscal quarter of each of
Corporation's fiscal years during the Term, Consultant shall be eligible to
receive a bonus of $20,000 if certain quota goals ("Quota Goals") are achieved
for that fiscal quarter. The Quota Goals for the 4th fiscal quarter of fiscal
year 1999 through the 3rd fiscal quarter of fiscal year 2000 as set forth on
the schedule attached hereto as Exhibit "A." The Quota Goals for any subsequent
fiscal quarter after the 3rd fiscal quarter of fiscal year 2000 shall be
mutually agreed to by Corporation and Consultant.
2
<PAGE> 3
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of
proper substantiation by Consultant, and subject to Corporation's sole
discretion, including rules and guidelines as Corporation may from time to time
adopt, Corporation shall reimburse Consultant for all reasonable expenses
actually paid or incurred by Consultant during the Term in the ordinary course
of and pursuant to the business of Corporation. Consultant shall account to
Corporation in writing for all expenses for which reimbursement is sought and
shall supply to Corporation copies of all relevant invoices, receipts or other
evidence reasonably requested by Corporation.
4.2 Automobile. During the Term, Corporation shall
provide Consultant with a non-accountable automobile allowance of One Thousand
Two Hundred Dollars ($1,200) per month, which amount is intended to compensate
Consultant for wear and tear and, in addition, reimburse Consultant for all
costs of gasoline, oil, repairs, maintenance, insurance and other expenses
incurred by Consultant by reason of the use of Consultant's automobile for
Corporation business from time to time.
4.3 Cellular Phone. During the Term, Corporation shall
provide Consultant with a cellular or digital phone (the "Phone") and
sufficient air time usage to enable Consultant to perform his duties set forth
in this Agreement. The Phone shall be the property of Corporation. Consultant
is responsible for any damage or loss to the Phone, except for normal wear and
tear, and upon any termination of this Agreement, the Phone shall be promptly
returned to Corporation.
5. TERMINATION.
(a) This Agreement may be terminated/canceled by either
party upon the occurrence of any of the following, except for Section 5(a)(v)
below which permits only Corporation to terminate, and the
terminating/canceling party shall have no liability to the other party for the
exercise of such right of termination/cancellation:
(i) In the event that the other party has
breached a covenant, obligation or warranty under this Agreement, other than as
discussed in Section 5 (a)(b), and such breach remains uncured for a period of
thirty (30) days after notice thereof is delivered to such other party;
(ii) In the event the other party ceases to
conduct business;
(iii) In the event the other party becomes
insolvent, makes a general assignment for the benefit of creditors, files a
voluntary petition of bankruptcy, suffers or permits the appointment of a
receiver for its business or assets, or becomes subject to any proceeding under
any bankruptcy or insolvency law, whether domestic or foreign, or has wound up
or liquidated, voluntarily or otherwise;
(iv) In the event of the mutual agreement of the
parties hereto;
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<PAGE> 4
(v) By Corporation in the event Consultant
fails to earn the bonus and achieve the prescribed Quota Goals for any two
consecutive fiscal quarters; or
(vi) In the event the Stock Purchase Agreement
is not executed by all the parties thereto, and the transactions contemplated
thereby are not consummated within thirty (30) days from the date first set
forth above.
(b) If Corporation terminates/cancels this Agreement
pursuant to this Section 5, Corporation shall have no further liability to
Consultant, except to pay Consultant for the Services performed and expenses
incurred by Consultant up to the effective date of termination/cancellation. If
Consultant terminates/cancels this Agreement pursuant to this Section 5,
Consultant shall have no further liability or obligation to Corporation
whatsoever.
6. RESTRICTIVE COVENANTS.
(a) Confidential Information. Consultant hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of Corporation. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by Consultant except as
required and authorized in furtherance of Corporation's business: trade
secrets, as defined in Section 688.002(4), Florida Statute's; specific
prospective customers of the Corporation; specific existing customers of the
Corporation; other individuals and businesses with whom Corporation does
business; proprietary information; financial or corporate records; operational,
sales, promotional, and marketing methods and techniques; computer programs,
including source codes and/or object codes; and/or any other proprietary,
competition sensitive, or technical information or secrets developed with or
without the help of Consultant.
(b) NonDisclosure. Consultant shall not, during the term
of his employment, or at any time thereafter, either directly or indirectly,
communicate, publish, disclose, divulge, or use, or authorize anyone else to
communicate, publish, disclose, divulge, or use, for the benefit of himself or
any other person, persons, partnership, association, corporation, or other
entity, any Confidential Information which may be communicated to Consultant or
of which Consultant may be apprised by virtue of his employment with
Corporation. Any and all information, knowledge, know-how, and techniques which
Corporation designates as confidential shall be deemed confidential for
purposes of this Agreement, except information which Consultant can demonstrate
came to his attention prior to disclosure thereof by Corporation; or which, at
or after the time of disclosure by Corporation to Consultant, lawfully had
become a part of the public domain through lawful publication or communication
by others.
(c) NonCompetition. Consultant covenants that, except as
otherwise approved in writing by Corporation, Consultant shall not, during the
term of this Agreement, and for a continuous uninterrupted period of twenty
four (24) months commencing upon the termination of Consultant's employment
relationship with Corporation, regardless of the cause for termination,
individually, or jointly with others, either directly or indirectly, for
himself, or
4
<PAGE> 5
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or other entity, own, maintain, operate, engage in,
or have any interest in any business enterprise which is the same as, similar
to or competitive with the Business, regardless of the geographical location of
such other business enterprise, shall not directly or indirectly act as an
officer, director, employee, partner, contractor, consultant, advisor,
principal, agent, or proprietor, or in any other capacity for, nor lend any
assistance (financial, managerial, consulting or otherwise) to or cooperate
with, any such business enterprise.
(d) NonSolicitation. Consultant specifically acknowledges
that he will have access to Confidential Information, including, without
limitation, trade secrets and prospective and existing customers or customer
lists of Corporation. Consultant covenants and agrees that during the term of
this Agreement, and for a continuous uninterrupted period of twenty four (24)
months, commencing upon the expiration or termination of Consultant's
relationship with Corporation, except as otherwise approved in writing by
Corporation, Consultant shall not, either directly or indirectly, for himself,
or through, on behalf of, or in conjunction with any person, persons,
partnership, association, corporation, or entity:
(i) Divert or attempt to divert or solicit any
prospective or existing customer of Corporation to any competitor by direct or
indirect inducement or otherwise; or
(ii) Employ or seek to employ any person
who is at that time employed by Corporation, any affiliate of Corporation, or
otherwise directly or indirectly induce or solicit such person to leave his or
her employment.
(e) Reasonably Necessary. Corporation and Consultant
agree that the Confidential Information set forth in Section 6(a), including,
without limitation, trade secrets: (i) are valuable, special, and a unique
asset of Corporation; (ii) have provided and will hereafter provide Corporation
with a substantial competitive advantage in the operation of its business; and
(iii) are a legitimate business interest of Corporation. Corporation and
Consultant also agree that the existence of these legitimate business interests
justifies the need for the restrictive covenants set forth in this Section 6,
and the restrictive covenants are reasonably necessary to protect Corporation's
legitimate business interests.
(f) Reasonable Restrictions. Consultant agrees and
acknowledge that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
Corporation. It is agreed by Consultant that if any portion of the restrictions
contained in this Agreement are held to be unreasonable, arbitrary, or against
public policy, then the restriction shall be considered divisible, both as to
the time and to the geographical area, with each month of the specified period
being deemed a separate period of time, and each country or portion thereof
being deemed a separate geographical area, so that the lesser period of time or
geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree
that in the event any court of competent jurisdiction determines the specified
period or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Consultant.
5
<PAGE> 6
(g) Continuity of Restrictions. If Consultant shall
violate any of the terms or covenants contained herein, and if any court action
is instituted by Corporation to prevent or enjoin such violation, then the
period of time during which the terms or covenants of this Agreement shall
apply, as provided in this Agreement, shall be lengthened by a period of time
equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not Corporation had knowledge
of the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal.
7. REMEDIES.
(a) Consultant and Corporation hereby acknowledge and
agree that, in the event of any breach by Consultant, directly or indirectly,
of the foregoing restrictive covenants, it will be difficult to ascertain the
precise amount of damages that may be suffered by Corporation by reason of such
breach; and accordingly, the parties hereby agree that, as liquidated damages
(and not as a penalty) in respect of any such breach, Consultant shall be
required to provide an accounting of any and all benefits received or derived,
either directly or indirectly, by Consultant as a result of such breach,
including, but not limited to, true and correct financial records, or other
data detailing the financial benefit Consultant received or derived, directly
or indirectly, from any and all violative acts or activities, and Consultant
thereafter shall be required to pay to Corporation, as damages, cash amounts
equal to any and all gross revenues received or derived by Consultant, directly
or indirectly, from any and all violative acts or activities. The parties
hereby agree that the foregoing constitutes a fair and reasonable estimate of
the actual damages that might be suffered by reason of any breach of Section 6
by Consultant, and the parties hereby agree to such liquidated damages in lieu
of any and all other measures of damages that might be asserted in respect of
any subject breach.
(b) Consultant agrees that a violation or a breach of the
terms, covenants, or provisions contained in this Agreement would cause
irreparable injury to Corporation, and that the remedy at law for any violation
or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
Corporation shall have the independent right to enjoin Consultant from any
threatened or actual activities in violation thereof. Consultant hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or
the posting of a bond. In the event Corporation does apply for such an
injunction, Consultant shall not raise as a defense thereto that Corporation
has an adequate remedy at law.
8. OWNERSHIP OF DEVELOPMENTS. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed
or created by Consultant during the course of performing work for Corporation
or its clients (collectively, the "Work Product") shall belong exclusively to
Corporation and shall, to the extent possible, be considered a work made by
Consultant for hire for Corporation within the meaning of Title 17 of the
United States Code. To the extent the
6
<PAGE> 7
Work Product may not be considered work made by Consultant for hire for
Corporation, Consultant agrees to assign, and automatically does assign at the
time of creation of the Work Product, without any requirement of further
consideration, any right, title, or interest Consultant may have in such Work
Product. Upon the request of Corporation, Consultant shall take such further
actions, including execution and delivery of instruments of conveyance, as may
be appropriate to give full and proper effect to such assignment.
9. RETURN OF RECORDS AND PROPERTY. Upon the request of
Corporation, or absent such request, upon the termination of Consultants
relationship contemplated in this Agreement with Corporation for any reason,
Consultant shall immediately return to Corporation all of Corporation's
property and any and all copies thereof in Consultants possession (the
"Property"). The Property shall include, but shall not be limited to, all
notes, data, reference material, sketches, drawings, memoranda, files,
documents, specifications and any records or any other property, tangible or
intangible, in any way relating to any of the Confidential Information or to
Corporation's business, whether prepared by Consultant or otherwise coming into
Consultants possession. The Property shall remain the exclusive property of
Corporation and shall not be removed from the premises of Corporation under any
circumstances whatsoever without the prior written consent of Corporation.
10. NATURE OF RELATIONSHIP. Consultant herein is an independent
contractor and will not act as Corporation's agent, nor shall be deemed an
employee of Corporation for any purpose and shall not be entitled to any
employee fringe benefits. Consultant shall not enter into any agreement or
incur any obligations on Corporation's behalf, or commit Corporation in any
manner without Corporation's prior written consent. As an independent
contractor, Consultant understands and agrees that Consultant is solely
responsible for the control and supervision of the means by which Consultant's
services are performed.
11. WAIVER. No waiver by Corporation of any default or
nonperformance hereunder shall be deemed a waiver of any subsequent default or
nonperformance. No waiver shall be effective unless in writing, and signed by
the party or parties to which the performance of duty is owed. No delay in the
serving of any right or remedy shall constitute a waiver of any right or
remedy.
12. CUMULATIVE REMEDIES. Notwithstanding the foregoing, all
remedies of Corporation hereunder are cumulative, in addition to any other
remedies provided for by law, and may, to the extent permitted by law, be
exercised concurrently or separately. The exercise of any one remedy shall not
be deemed to be an election of such remedy, or to preclude the exercise of any
other remedy.
13. CLAIMS NOT A DEFENSE. Consultant expressly agrees that the
existence of any claims that he may have against Corporation, whether or not
arising from this Agreement, shall not constitute a defense to the enforcement
by Corporation of the covenants or provisions herein.
14. INDEPENDENT COVENANTS. The parties agree that each of the
covenants and provisions contained in this Agreement shall be deemed severable
and construed as independent of any other covenant or provision. If all or any
portion of a covenant or provision in this
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<PAGE> 8
Agreement is held invalid, unreasonable or unenforceable by a court or agency
having valid jurisdiction in an unappealed final decision to which Corporation
is a party, the remaining covenants and provisions shall remain valid and
enforceable. Consultant expressly agrees to be bound by any lesser covenant or
provision subsumed within the terms of such covenant or provision that imposes
the maximum duty permitted by law, as if the resulting covenant or provision
were separately stated in, and made a part of this Agreement.
15. ENTIRE AGREEMENT. This Agreement contains and represents the
entire and complete understanding and agreement concerning and in reference to
the employment arrangement between the parties hereto. The parties hereto agree
that no prior statements, representations, promises, agreements, instructions,
or understandings, written or oral, pertaining to this Agreement, other than
those specifically set forth and stated herein, shall be of any force or
effect.
16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and
shall not be construed to have been modified, amended, rescinded, canceled, or
waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
17. ATTORNEYS' FEES. In the event of a dispute regarding, arising
out of, or in connection with the breach, enforcement, or interpretation of
this Agreement, including, without limitation, any action seeking declaratory
relief, equitable relief, injunctive relief, or damages, or any litigation or
cause of action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and actual attorney's
fees incurred in connection therewith, including any costs of collection
(including paralegals' fees).
18. PERSONAL JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL
COURTS LOCATED IN ORANGE COUNTY, FLORIDA, FOR RESOLUTION OF ALL DISPUTES
ARISING OUT OF, IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION,
CONSTRUCTION, AND ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR
DEFENSE THEREIN THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
19. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS
AGREEMENT, EMPLOYEE SPECIFICALLY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY
ISSUES SO TRIABLE.
20. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, and to the
exclusion of the law of any other forum, without regard to the jurisdiction in
which any action or special proceeding may be instituted.
21. CONSTRUCTION. Each party to this Agreement had the opportunity
to consult with counsel of their choice and make comments concerning the
Agreement. No legal or other presumption against the party drafting this
Agreement concerning its construction, interpretation or
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<PAGE> 9
otherwise accrue to the benefit of any party to this Agreement and each party
expressly waives the right to assert such a presumption in any proceedings or
disputes connected with, arising out of, or involving this Agreement.
22. SECTION HEADINGS. The titles to the numbered paragraphs in
this Agreement are solely for the convenience of the parties and shall not be
used to explain, modify, simplify, or aid in the interpretation of said
covenants or provisions set forth therein.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first set forth above.
WORLD COMMERCE ONLINE, INC., a
Nevada corporation
By: /s/ Keith Money
----------------------------------------------
Keith Money, Chief Marketing Officer &
Executive Vice President
JOBO HOLDING B.V., an entity organized under
the laws of the Netherlands
By: /s/ Nils van Beek
----------------------------------------------
Nils van Beek, President
9
<PAGE> 10
EXHIBIT A
<TABLE>
<CAPTION>
Q4 1999 Q1 2000 Q2 2000 Q3 2000
------- ------- ------- -------
<S> <C> <C> <C> <C>
Turnover Revenue 3,000,000g 14,000,000g 14,000,000g 8,000,000g
(in Guilders)
</TABLE>
10
<PAGE> 1
EXHIBIT 10.11
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT, entered into this 7th day of
September, 1999 by and between LANDO TRADEPORT LIMITED PARTNERSHIP (Landlord)
and WORLD COMMERCE ONLINE, INC. (Tenant).
W I T N E S S E T H
WHEREAS, on February 15, 1999, Landlord and Tenant entered into a
certain Lease, with respect to premises situated in the County of Orange, City
of Orlando, State of Florida, as is more particularly described in said Lease
and,
WHEREAS, Landlord and Tenant are desirous of modifying the same in
certain respects.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. Tenant presently occupies 21,852 rentable square feet, Bay "P
front - V", South Building (referred to as Existing Premises),
as delineated in green on the site plan attached marked Exhibit
"A". Tenant desires to lease an additional 3,240 rentable square
feet of Bay "P (rear)", South Building (referred to as New
Premises) as delineated in pink on the site plan attached marked
Exhibit "A". The Old Premises and New Premises shall hereinafter
be known as the Leased Premises for all purposes of the Lease
and the revised -square footage shall be 25,092 rentable square
feet.
2. The lease term shall remain the same and the new rental amount
shall be effective commencing October 1, 1999 and terminating on
March 31, 2003.
3 The revised rental payments for the Leased Premises shall be as
follows:
a. Commencing with October 1, 1999 and continuing through
March 31, 2000, Tenant shall pay for 25,092 rentable square
feet, the sum of ONE HUNDRED TWELVE THOUSAND NINE HUNDRED
FOURTEEN AND 00/100 DOLLARS ($112,914.00), plus Florida
sales tax, payable in equal consecutive monthly
installments of EIGHTEEN THOUSAND EIGHT HUNDRED NINETEEN
AND 00/100 DOLLARS ($18,819.00) each, Plus Florida sales
tax. Tenant's new monthly escrow amount shall be THREE
THOUSAND EIGHT HUNDRED SEVENTY-TWO AND 50/100 DOLLARS
($3,872.50), plus Florida sales tax.
b. Commencing with April 1, 2000 and continuing through March
31, 2001, Tenant shall pay for 25,092 rentable square feet,
the sum of TWO HUNDRED FIFTY THOUSAND NINE HUNDRED TWENTY
AND 00/100 DOLLARS ($250,920.00), plus Florida sales tax,
payable in equal consecutive monthly installments of TWENTY
THOUSAND NINE HUNDRED TEN AND 00/100 DOLLARS ($20,910.00)
each, plus Florida sales tax. Tenant's monthly escrow
amount to be determined after 1999 year end.
c. Commencing with April 1, 2001 and continuing through March
31, 2002, Tenant shall pay for 25,092 rentable square feet,
the sum of TWO HUNDRED SIXTY THREE THOUSAND FOUR HUNDRED
SIXTY SIX AND 00/100 DOLLARS ($263,466.00), plus Florida
sales tax, payable in equal consecutive monthly
installments of TWENTY ONE THOUSAND NINE HUNDRED FIFTY FIVE
AND 50/100 DOLLARS ($21,955.50) each, plus Florida sales
tax. Tenant's monthly escrow amount to be determined after
year 2000 end.
d. Commencing with April 1, 2002 and continuing through March
31, 2003, Tenant shall pay for 25,092 rentable square feet,
the sum of TWO HUNDRED SIXTY THREE THOUSAND FOUR HUNDRED
SIXTY SIX AND 00/100 DOLLARS ($263,466.00), plus Florida
sales tax, payable in equal consecutive monthly
installments of TWENTY ONE THOUSAND NINE HUNDRED FIFTY FIVE
AND 501100 DOLLARS
<PAGE> 2
($21,955.50) each, plus Florida sales tax. Tenant's monthly
escrow amount to be determined after year 2001 end.
4. Tenant agrees to take additional 3,240 rentable square feet
of expansion space known as Bay "P rear", South Building,
in an "as is" condition.
5. A security deposit for the additional 3,240 rentable square
feet of expansion space in the amount of TWO THOUSAND EIGHT
HUNDRED THIRTY FIVE AND 00/100 DOLLARS ($2,835.00), is to
be paid upon execution of this First Amendment to Lease
Agreement.
6. Except as expressly amended herein, all other terms and
conditions of said Lease shall remain in full force and
effect and are hereby ratified and confirmed.
7. This First Amendment to Lease Agreement shall be binding
upon the parties hereto and their respective heirs,
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
WITNESSES: LANDLORD:
LANDO TRADEPORT LIMITED
PARTNERSHIP
/s/ Patricia Kausch By: /s/ Stuart Frankel
- ----------------------------------- --------------------------
Patricia Kausch Stuart Frankel
TENANT:
WORLD COMMERCE ONLINE, INC.
/s/ Angela Tillis By: /s/ Kenneth B. Cobb, II
- ----------------------------------- --------------------------
Angela Tillis Kenneth B. Cobb, II
Chief Financial Officer
-2-
<PAGE> 3
EXHIBIT "A"
- 3 -
<PAGE> 1
EXHIBIT 10.12
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), is made and entered into
as of the 1st day of October, 1999, by and between WORLD COMMERCE ONLINE, INC.,
a Delaware corporation, with an address at 9677 Tradeport Drive, Orlando,
Florida 32827 ("Corporation"), and Charles Kremp III, with an address at 220
Davisville Road, Willow Grove, PA 19090 ("Consultant").
R E C I T A L S:
WHEREAS, Corporation is engaged in the business of developing and
promoting an online, Global Commercial Network (GCN) known as "Floraplex," with
its related trading systems "Tradelink" (Growers/Importers to Wholesalers),
"FloraMall" (Wholesalers to Retailers), and "FloraShops" (Retailers to
Consumers) [hereinafter collectively referred to as "FLORAPLEX"], for
conducting worldwide e-commerce in the floral industry using the World Wide Web
(HEREINAFTER, "BUSINESS");
WHEREAS, Corporation desires to retain the services of Consultant to
promote Floraplex, particularly promoting Floraplex for use by retail florists;
WHEREAS, Consultant is currently engaged in the business of the
distribution of floral products (flowers and hard goods) known as "The Kremp
Network," through a corporation owned and controlled by Consultant (hereinafter
"Business"), but Consultant now desires to promote "Floraplex" to the exclusion
of any other e-commerce or floral distribution solution;
WHEREAS, Consultant executes this Agreement, intending Corporation to
rely on the terms, covenants, and provisions specifically set forth and stated
herein, and expressly to induce Corporation to engage Consultant; and
WHEREAS, Consultant currently has or will have access to Corporation's
Confidential Information (hereinafter defined in Section 8(a); and Corporation,
as an express condition precedent to retaining Consultant, requires that
Consultant execute this Agreement wherein Consultant expressly covenants and
agrees to maintain the confidentiality of the Confidential Information and not
to engage in conduct competitive to the Corporation;
NOW, THEREFORE, for the reasons set forth above, and in consideration
of the mutual promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Consultant hereby covenants and agrees as follows:
1. RECITALS. The foregoing recitals are true and correct and form a
part of this Agreement.
2. TERM. Corporation hereby retains Consultant for a three-year
period (the "Term") beginning October 1, 1999 ("Starting Date"), and ending
September 30, 2002.
<PAGE> 2
3. CONSULTANT'S DUTIES. Consultant shall serve as a general advisor
and consultant to management on matters pertaining to the promotion of
Floraplex, with an emphasis on the rollout and promotion of the "FloraMall" and
"FloraShops" trading systems, and such other matters pertaining to the
Corporation's business as may, from time-to-time, be assigned to Consultant. As
a material inducement of this Agreement, Consultant agrees to immediately cause
The Kremp Network to cease operating, to wind up its business affairs, and to
advise and encourage members using The Kremp Network to transfer their business
to Floraplex. For the Term of this Agreement, Consultant shall so curtail the
business activities of The Kremp Network.
4. CONSIDERATION. The Consultant shall receive the following
consideration for the performance of his duties:
a. STOCK/WARRANT GRANT. Corporation shall issue and deliver,
or cause its transfer agent to so deliver, to Consultant certificate(s)
representing twenty thousand (20,000) shares of common stock, par value of
$.001 per share. Corporation shall also issue Consultant warrants to purchase
two hundred fifty thousand (250,000) shares of common stock at $8.00 per share
pursuant to a Warrant Agreement to be executed herewith in the form attached
hereto as EXHIBIT "A."
b. COMPENSATION. Consultant shall be paid $300,000.00 in total
compensation on the following schedule:
i. $25,000.00 upon execution of this Agreement, and
thereafter $25,000.00 on the first day of each calendar quarter for eleven (11)
successive quarters.
5. INVESTMENT REPRESENTATION. Consultant hereby represents that he
understands that the transaction contemplated by this Agreement is to be
carried out as a transaction exempt from registration under the Securities Act
of 1933, as amended (the "Act"), and accordingly neither the Warrants nor the
shares underlying the Warrants (collectively, the "Shares") will have been
registered under the Act at the time of delivery to Consultant. Consultant
further represents that he is acquiring the Shares for investment purposes only
and not with a view to or for resale in connection with any distribution of the
Shares, nor with any present intention of distribution (within the meaning of
the Act) of the Shares. Consultant understands that because the Shares will not
have been registered under the Act, Consultant will not permit the transfer of
such Shares without registration under the Act, or upon the issuance to the
Corporation of a favorable opinion of its counsel or of the submission to
Corporation of such other evidence as may be satisfactory to counsel for the
Corporation, in either case, to the effect that any such transfer, whether
pursuant to Rule 144 of the Act or otherwise, shall not violate the Act, and
any applicable state securities laws, and that the share certificates
representing such Shares will be issued with a restrictive legend providing
notice of such restriction.
6. ACCESS TO INFORMATION. Consultant hereby represents and warrants
to Corporation that he has had an opportunity to ask questions of, and receive
answers from, appropriate officers and representatives of the Corporation
concerning the terms and conditions of the issuance of the
2
<PAGE> 3
Shares and to obtain any additional information concerning the Corporation
which he has requested. In addition, Consultant represents and warrants that
the Corporation has made available for inspection by him various documents
connected with the Corporation's business and has not refused in any way to
permit Consultant to inspect any document requested by him to be inspected.
7. EXPENSE REIMBURSEMENT AND OTHER BENEFITS. Upon the submission of
proper substantiation by Consultant, and subject to Corporation's sole
discretion, including rules and guidelines as Corporation may from time-to-time
adopt, Corporation shall reimburse Consultant for all reasonable expenses
actually paid or incurred by Consultant during the Term in the ordinary course
of Corporation's business. Consultant shall account to Corporation in writing
for all expenses for which reimbursement is sought and shall supply to
Corporation copies of all relevant invoices, receipts or other evidence
reasonably requested by Corporation.
8. TERMINATION. This Agreement may be terminated/canceled by either
party upon the occurrence of any of the following, and the terminating/
canceling party shall have no liability to the other party for the exercise of
such right of termination/cancellation:
a. Either party may terminate this Agreement by written notice
effective at the end of the calendar quarter in which the termination notice is
sent or transmitted by the terminating party;
b. In the event that the other party has breached a covenant,
obligation or warranty under this Agreement, and such breach remains uncured
for a period of thirty (30) days after notice thereof is delivered to such
other party;
c. In the event the other party ceases to conduct business;
d. In the event the other party becomes insolvent, makes a
general assignment for the benefit of creditors, files a voluntary petition of
bankruptcy, suffers or permits the appointment of a receiver for its business
or assets, or becomes subject to any proceeding under any bankruptcy or
insolvency law, whether domestic or foreign, or has wound up or liquidated,
voluntarily or otherwise; or
e. In the event of the mutual agreement of the parties hereto.
9. RESTRICTIVE COVENANTS.
a. CONFIDENTIAL INFORMATION. Consultant hereby acknowledges
and agrees that in the course of his consulting engagement, he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of Corporation. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by Consultant except as
required and authorized in furtherance of Corporation's business: (i) trade
secrets, as defined in Section 688.002(4), Florida Statute's; specific
prospective customers of the Corporation; (ii) specific existing customers of
the Corporation; (iii) other individuals and businesses with whom Corporation
does business; proprietary information; (iv) financial or corporate records; (v)
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<PAGE> 4
operational, sales, promotional, and marketing methods and techniques; (vi)
computer programs, including source codes and object codes; and (vii) any other
proprietary, competition-sensitive, or technical information or secrets
developed with or without the help of Consultant.
b. NONDISCLOSURE. Consultant shall not, during the term of
his consulting engagement, or at any time thereafter, either directly or
indirectly, communicate, publish, disclose, divulge, or use, or authorize
anyone else to communicate, publish, disclose, divulge, or use, for the benefit
of himself or any other person, persons, partnership, association, corporation,
or other entity, any Confidential Information which may be communicated to
Consultant or of which Consultant may be apprised by virtue of his employment
with Corporation. Any and all information, knowledge, know-how, and techniques
which Corporation designates as confidential shall be deemed confidential for
purposes of this Agreement, except information which Consultant can demonstrate
came to his attention prior to disclosure thereof by Corporation; or which, at
or after the time of disclosure by Corporation to Consultant, lawfully had
become a part of the public domain through lawful publication or communication
by others.
c. NONCOMPETITION. Provided Corporation is not in breach of
this Agreement, Consultant covenants that, except as otherwise approved in
writing by Corporation, Consultant shall not, during the term of this
Agreement, and for a continuous uninterrupted PERIOD OF TWELVE (12) MONTHS IF
CORPORATION TERMINATES THIS AGREEMENT, OR ALTERNATIVELY TWENTY-FOUR (24) MONTHS
IF CONSULTANT TERMINATES THIS AGREEMENT, commencing upon the termination of
Consultant's consulting relationship with Corporation, regardless of the cause
for termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, INCLUDING,
WITHOUT LIMITATION, FTD, AFS, TELEFLORA, 1-800-FLOWERS, OR ANY OTHER WIRE
SERVICE, regardless of the geographical location of such other business
enterprise, shall not directly or indirectly act as an officer, director,
employee, partner, contractor, consultant, advisor, principal, agent, or
proprietor, or in any other capacity for, nor lend any assistance (financial,
managerial, consulting or otherwise) to or cooperate with, any such business
enterprise. SPECIFICALLY, THIS COVENANT SHALL PRECLUDE CONSULTANT FROM ENGAGING
IN ANY BUSINESS ACTIVITIES SIMILAR TO THAT BEING CONDUCTED BY THE KREMP NETWORK
FOR THE DISTRIBUTION OF FLORAL PRODUCTS.
d. NONSOLICITATION. Consultant specifically acknowledges that
he will have access to Confidential Information, including, without limitation,
trade secrets and prospective and existing customers or customer lists of
Corporation. Consultant covenants and agrees that during the term of this
Agreement, and for a continuous uninterrupted period of twenty four (24)
months, commencing upon the expiration or termination of Consultant's
relationship with Corporation, except as otherwise approved in writing by
Corporation, Consultant shall not, either directly or indirectly, for himself,
or through, on behalf of, or in conjunction with any person, persons,
partnership, association, corporation, or entity:
i. Divert or attempt to divert or solicit any prospective or
existing customer of Corporation to any competitor by direct or indirect
inducement or otherwise; or
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ii. Employ or seek to employ any person who is at that time
employed by Corporation, any affiliate of Corporation, or otherwise directly or
indirectly induce or solicit such person to leave his or her employment.
e. REASONABLY NECESSARY. Corporation and Consultant agree that
the Confidential Information set forth in Section 8(a), including, without
limitation, trade secrets: (i) are valuable, special, and a unique asset of
Corporation; (ii) have provided and will hereafter provide Corporation with a
substantial competitive advantage in the operation of its business; and (iii)
are a legitimate business interest of Corporation. Corporation and Consultant
also agree that the existence of these legitimate business interests justifies
the need for the restrictive covenants set forth in this Section 8, and the
restrictive covenants are reasonably necessary to protect Corporation's
legitimate business interests.
f. REASONABLE RESTRICTIONS. Consultant agrees and acknowledges
that the geographical and time limitations contained in this Agreement are
reasonable and properly required for the adequate protection of Corporation. It
is agreed by Consultant that if any portion of the restrictions contained in
this Agreement is held to be unreasonable, arbitrary, or against public policy,
then the restriction shall be considered divisible, both as to the time and to
the geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof being deemed a
separate geographical area, so that the lesser period of time or geographical
area shall remain effective, so long as the same is not unreasonable,
arbitrary, or against public policy. The parties hereto agree that in the event
any court of competent jurisdiction determines the specified period or the
specified geographical area of the restricted territory to be unreasonable,
arbitrary, or against public policy, a lesser time period or geographical area
which is determined to be reasonable, non-arbitrary, and not against public
policy may be enforced against Consultant.
g. CONTINUITY OF RESTRICTIONS. If Consultant shall violate any
of the terms or covenants contained herein, and if any court action is
instituted by Corporation to prevent or enjoin such violation, then the period
of time during which the terms or covenants of this Agreement shall apply, as
provided in this Agreement, shall be lengthened by a period of time equal to
the period between the date of the initial breach of the terms or covenants
contained in this Agreement, whether or not Corporation had knowledge of the
breach, and the date on which the decree of the court disposing of the issues
upon the merits shall become final and not subject to further appeal.
10. REMEDIES.
a. Consultant and Corporation hereby acknowledge and agree
that, in the event of any breach by Consultant, directly or indirectly, of the
foregoing restrictive covenants, it will be difficult to ascertain the precise
amount of damages that may be suffered by Corporation by reason of such breach;
and accordingly, the parties hereby agree that, as liquidated damages (and not
as a penalty) in respect of any such breach, Consultant shall be required to
provide an accounting of any and all benefits received or derived, either
directly or indirectly, by Consultant as a result of such breach, including, but
not limited to, true and correct financial records, or
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other data detailing the financial benefit Consultant received or derived,
directly or indirectly, from any and all violations, and Consultant thereafter
shall be required to pay to Corporation, as liquidated damages, cash amounts
equal to any and all gross revenues received or derived by Consultant, directly
or indirectly, from any and all violations. The parties hereby agree that the
foregoing constitutes a fair and reasonable estimate of the actual damages that
might be suffered by reason of any breach of Section 8 by Consultant, and the
parties hereby agree to such liquidated damages in lieu of any and all other
measures of damages that might be asserted in respect of any subject breach.
b. Consultant agrees that a violation or a breach of the
terms, covenants, or provisions contained in this Agreement would cause
irreparable injury to Corporation, and that the remedy at law for any violation
or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
Corporation shall have the independent right to enjoin Consultant from any
threatened or actual activities in violation thereof. Consultant hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or
the posting of a bond. In the event Corporation does apply for such an
injunction, Consultant shall not raise as a defense thereto that Corporation
has an adequate remedy at law.
11. OWNERSHIP OF DEVELOPMENTS. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed
or created by Consultant during the course of performing work for Corporation
or its clients (collectively, the "Work Product") shall belong exclusively to
Corporation and shall, to the extent possible, be considered a work made by
Consultant for hire for Corporation within the meaning of Title 17 of the
United States Code. To the extent the Work Product may not be considered work
made by Consultant for hire for Corporation, Consultant agrees to assign, and
automatically does assign at the time of creation of the Work Product, without
any requirement of further consideration, any right, title, or interest
Consultant may have in such Work Product. Upon the request of Corporation,
Consultant shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
12. RETURN OF RECORDS AND PROPERTY. Upon the request of Corporation,
or absent such request, upon the termination of Consultant's relationship
contemplated in this Agreement with Corporation for any reason, Consultant
shall immediately return to Corporation all of Corporation's property and any
and all copies thereof in Consultant's possession (the "Property"). The
Property shall include, but shall not be limited to, all notes, data, reference
material, sketches, drawings, memoranda, files, documents, specifications and
any records or any other property, tangible or intangible, in any way relating
to any of the Confidential Information or to Corporation's business, whether
prepared by Consultant or otherwise coming into Consultant's possession. The
Property shall remain the exclusive property of Corporation and shall not be
removed from the premises of Corporation under any circumstances whatsoever
without the prior written consent of Corporation.
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13. NATURE OF RELATIONSHIP. Consultant herein is an independent
contractor and will not act as Corporation's agent, nor shall be deemed an
employee of Corporation for any purpose and shall not be entitled to any
employee fringe benefits. Consultant shall not enter into any agreement or
incur any obligations on Corporation's behalf, or commit Corporation in any
manner without Corporation's prior written consent. As an independent
contractor, Consultant understands and agrees that Consultant is solely
responsible for the control and supervision of the means by which Consultant's
services are performed.
14. WAIVER. No waiver by Corporation of any default or
nonperformance hereunder shall be deemed a waiver of any subsequent default or
nonperformance. No waiver shall be effective unless in writing, and signed by
the party or parties to which the performance of duty is owed. No delay in the
serving of any right or remedy shall constitute a waiver of any right or
remedy.
15. CUMULATIVE REMEDIES. Notwithstanding the foregoing, all remedies
of Corporation hereunder are cumulative, in addition to any other remedies
provided for by law, and may, to the extent permitted by law, be exercised
concurrently or separately. The exercise of any one remedy shall not be deemed
to be an election of such remedy, or to preclude the exercise of any other
remedy.
16. INDEPENDENT COVENANTS. The parties agree that each of the
covenants and provisions contained in this Agreement shall be deemed severable
and construed as independent of any other covenant or provision. If all or any
portion of a covenant or provision in this Agreement is held invalid,
unreasonable or unenforceable by a court or agency having valid jurisdiction in
an unappealed final decision to which Corporation is a party, the remaining
covenants and provisions shall remain valid and enforceable. Consultant
expressly agrees to be bound by any lesser covenant or provision subsumed
within the terms of such covenant or provision that imposes the maximum duty
permitted by law, as if the resulting covenant or provision were separately
stated in, and made a part of this Agreement.
17. ENTIRE AGREEMENT. This Agreement contains and represents the
entire and complete understanding and agreement concerning and in reference to
the employment arrangement between the parties hereto. The parties hereto agree
that no prior statements, representations, promises, agreements, instructions,
or understandings, written or oral, pertaining to this Agreement, other than
those specifically set forth and stated herein, shall be of any force or
effect.
18. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and
shall not be construed to have been, modified, amended, rescinded, canceled, or
waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
19. ATTORNEYS' FEES. In the event of a dispute regarding, arising
out of, or in connection with the breach, enforcement, or interpretation of
this Agreement, including, without limitation, any action seeking declaratory
relief, equitable relief, injunctive relief, or damages, or any litigation or
cause of action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the
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prevailing party shall recover all costs and actual attorney's fees incurred in
connection therewith, including any costs of collection (including paralegals'
fees).
20. PERSONAL JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO SUBMIT
TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS LOCATED
IN ORANGE COUNTY, FLORIDA, FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF, IN
CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
21. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS
AGREEMENT, CONSULTANT SPECIFICALLY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY
ISSUES SO TRIABLE.
22. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, and to the exclusion of
the law of any other forum, without regard to the jurisdiction in which any
action or special proceeding may be instituted.
23. CONSTRUCTION. Each party to this Agreement had the opportunity
to consult with counsel of their choice and make comments concerning the
Agreement. No legal or other presumption against the party drafting this
Agreement concerning its construction, interpretation or otherwise accrue to
the benefit of any party to this Agreement and each party expressly waives the
right to assert such a presumption in any proceedings or disputes connected
with, arising out of, or involving this Agreement.
24. SECTION HEADINGS. The titles to the numbered paragraphs in this
Agreement are solely for the convenience of the parties and shall not be used
to explain, modify, simplify, or aid in the interpretation of said covenants or
provisions set forth therein.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first set forth above.
WORLD COMMERCE ONLINE, INC., a
Delaware corporation
By: /s/ Robert H. Shaw
---------------------------------------
Robert H. Shaw, CEO/President
/s/ Charles Kremp III
---------------------------------------
Charles Kremp III
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EXHIBIT 10.13
WORLD COMMERCE ONLINE. INC. DEMONSTRATION LICENSE AGREEMENT
FOR FLORAPLEX SYSTEM(TM)
This License Agreement is entered into between AnswerThink Consulting
Group, Inc., (End User) and World Commerce Online, Inc. ("WCO"), dated the 4th
day of October, 1999.
1. GRANT OF LICENSE.
WCO grants to End User a nonexclusive, nontransferable license to use
one copy of the Floraplex System(TM) computer program and written
documentation (collectively the "Software"), to be loaded and operated
on one designated file server at a time for the exclusive use at the
i2 Technologies, Inc. trade show demonstration ("Trade Show") on
____________________.
2. OTHER RESTRICTIONS.
End User shall not sell, lease or sublicense the Software. End User
may not retain any copies of the Software and related written
documentation. End User shall not make any copies, or allow others to
make copies, of the Software, other than as permitted herein. End User
shall not reverse engineer, recompile or disassemble the Software. End
User shall not use the Software in any service bureau or timesharing
environment and shall not rent the Software. End User will return all
copies of the Software and reformat the hard drive of the server used
to demonstrate the Floraplex System(TM) at the conclusion of the Trade
Show.
3. COPYRIGHT.
The Software and written materials are owned by WCO and are protected
by United States copyright laws and international treaty provisions.
Therefore, End User shall treat the Software and written materials as
any other restricted copyrighted material, except that End User may,
solely for purposes of the Trade Show: (a) make one copy of the
Software solely for backup or archival purposes; (b) transfer the
Software to a single hard disk providing End User keeps the original
solely for backup or archival purposes; or (c) copy the written
materials accompanying the Software for internal use only.
4. INDEMNIFICATION.
In the event that a claim is brought or asserted against End User
alleging the Software, releases including changes and other
modifications to the Software, constitutes an infringement of a U.S.
patent, copyright, or trade secret, WCO agrees to defend, at its own
expense, or at its option to settle all such claims. In the event that
a claim is brought or asserted against WCO arising from End User's use
or demonstration of the Software, End User agrees to defend, at its
own expense, or at its option to settle all such claims.
<PAGE> 2
5. TERMINATION OF LICENSE.
WCO may terminate this License if End User breaches or violates any of
the restrictions stated herein, provided End User fails to cure such
breach or violation within three (3) days from date of notification.
6. WARRANTY DISCLAIMER.
WCO EXPRESSLY WAIVES AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE.
7. DAMAGE LIMITATION.
IN NO EVENT SHALL WCO BE LIABLE FOR SPECIAL, CONSEQUENTIAL,
COLLATERAL, OR INCIDENTAL DAMAGES AS A RESULT OF ANY BREACH OF
WARRANTY, EXPRESS OR IMPLIED, ARISING OUT OF THE LICENSE OR USE OF THE
SOFTWARE.
8. CONFIDENTIALITY.
End User acknowledges that the Software and related written materials
are proprietary and confidential trade secrets of WCO and may not be
disclosed to any party without prior permission of WCO. End User also
agrees to maintain the Software and all related written materials in
confidence using no less care than that used to maintain and protect
the confidentiality of End User's similar confidential information.
End User agrees to allow WCO to use End User's name for limited
activities including a press release announcing this License Agreement
and a mutually agreeable number of telephone reference calls or
on-site reference visits. WCO agrees not to disclose any of End User's
proprietary and confidential information or trade secrets as part of
these limited activities.
9. EQUITABLE RELIEF
End User acknowledges that any breach of its obligations with respect
to proprietary rights of WCO will cause WCO irreparable injury for
which there are no adequate remedies at law and that WCO shall be
entitled to equitable relief in addition to all other remedies
available to it.
10. NOTICE.
All written notices between the parties shall be considered to have
been given if sent by certified or registered mail to the address set
forth below or other such address as either party may provide in
writing as a change of address.
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11. GOVERNING LAW.
The laws of the State of Florida shall govern this Agreement.
12. SEVERABILITY.
Each provision of this License Agreement is severable from the entire
Agreement. In the event that any such provision hereof is declared
invalid or unenforceable, the remaining provisions shall remain in
effect.
13. FEES AND SERVICES.
All fees have been waived by WCO to End User for the use of its
Floraplex System(TM) software during the Trade Show demonstration.
Answer Think Consulting Group World Commerce Online, Inc.
3200 Winely Hill Road 9677 Tradeport Drive
Suite 800 West Orlando, FL 32827-5813
Atlanta, GA 30339
/s/ William Alex Dryden /s/ John R. Daniel II
- --------------------------------- --------------------------------------
Authorized Signature Authorized Signature
- --------------------------------- --------------------------------------
William Alex Dryden John R. Daniel II
Manager 10/4/99 Executive Vice President 10/4/99
- --------------------------------- --------------------------------------
Title Date Title Date
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EXHIBIT 10.14
WEB SITE DEVELOPMENT AGREEMENT
AGREEMENT, dated as of October 14, 1999 (the "Effective Date"), by and
between World Commerce Online, having its principal place of business at Orlando
International Airport, Tradeport Commerce Center, 9675 Tradeport Drive, Orlando,
Florida 32827, and Snickelways, Inc., dba Snickelways Interactive, a New York
Corporation ("SI"), having its principal place of business at 180 Varick Street,
New York, New York 10014; both parties hereinafter referred to collectively as
the "Parties."
WHEREAS, SI is an experienced designer and developer of interactive
multimedia and electronic commerce products, software, services and associated
audio-visual works specializing in the use of new media, including that portion
of the Internet known as the World Wide Web ("WWW" or "the Web"), in a wide
variety of commercial and business contexts;
WHEREAS, Client desires to engage the services of SI to receive
consulting services, develop functional and technical specifications for a WWW
application (the "Specifications", attached hereto as Exhibit A) and develop
said application;
WHEREAS, SI desires to perform the SI Services for Client pursuant to
the terms and conditions of this Agreement as set forth herein;
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. In this Agreement, the following terms shall have the
meanings expressed herein.
(a) "Acceptance Period" shall mean the period specified in this
Agreement or any Work Order thereto during which Client reviews Deliverables
delivered to it by SI in order to determine whether or not to accept such
Deliverables on the basis of substantial conformity to the Specifications.
(b) "Change Order" shall mean a mutually agreed, written
specification of a change (i) in the-scope of SI Services under a Work Order,
which is attached to and thereafter forms part of the Work Order, or (ii) in the
Specifications, which is attached to and thereafter forms part of the
Specifications.
(c) "Client Materials" shall mean any content or other materials,
including, but not limited to, any images, photographs, illustrations, graphics,
audio or video clips or text, that Client has provided to or may provide to SI,
directly or indirectly pursuant to this Agreement.
(d) "Custom Software" shall mean any and all program code that is
not Original Code, produced by the personnel assigned by SI to perform the SI
Services for Client and prepared in accordance with the Specifications and any
Work Orders issued under this Agreement, and identified as such in Exhibit F
attached hereto, as appended and/or amended from time to time by the parties
pursuant to a Work Order.
<PAGE> 2
(e) "Deliverables" shall mean the result of work (other than
Original Code) produced by the personnel assigned by SI to perform the ST
Services for Client in accordance with the Specifications and any Work Orders
issued under this Agreement.
(f) "Original Code" shall mean any and all pre-existing or
independently developed SI proprietary program code and/or original program code
developed by SI, including without limitation all copyrights, patent rights,
trade secrets, trademarks and other proprietary rights thereto.
(g) "SI Services" shall mean services for Client, as set forth in
detail on Exhibit A hereto, including, (i) with respect to Client's FloraShops
Web site, the development of a templating engine and the development and launch
of individual florist Web sites; (ii) with respect to Client's FloraMall Web
site, the development of a templating engine and the development and launch of
individual wholesale florist Web sites; and (iii) with respect to American
Floral Services, the development of extranet and internet Web sites, each of the
foregoing, subject to individual Work Orders.
(h) "Work Order" shall mean the mutually agreed document attached
to this Agreement as Exhibit B, describing the scope of work of the SI Services,
including without limitation any applicable delivery milestones and payment
schedules, and any amendments and Change Orders thereto.
(i) "Year 2000 Compliant" means that: (i) neither performance nor
functionality is or will be affected in a materially adverse manner by dates
prior to, during and after the Year 2000; in particular: (a) no value for
current date will cause any interruption in operation; (ii) all manipulations of
date or time related data will produce the required results for all valid date
values prior to, during and after Year 2000; (iii) if the date elements in
interfaces and data storage specify the century, they will permit specifying the
correct century either explicitly or by unambiguous algorithms or inferencing
rules; and where any date element is represented without a century, the correct
century shall be unambiguous for all manipulations involved in that element; and
(iv) the Year 2000 must be recognized as a leap year.
2. SCOPE OF SERVICES.
(a) Prior to or promptly following the Effective Date of this
Agreement, (i) SI shall, in consultation with Client, prepare the Specifications
which shall consist of, among other things, a design for Client's Web
application for Client's Web site (the "Site"), programming and interactive
feature requirements and the placement of content or other materials to be
incorporated into the application or Site; and (ii) the Parties shall mutually
develop and agree on an initial Work Order to implement SI Services according to
the Specifications. Any subsequent changes to the scope of SI Services, or the
Specifications, shall be mutually agreed to in writing, in the form of a Change
Order, and SI shall have no obligation to perform services in connection with
any such changes until the Parties have agreed as provided herein. The form of
Change Order which shall be executed by the Parties is attached hereto as
Exhibit C. In the event that the Parties are unable to agree in writing to
mutually acceptable Specifications after good faith efforts thirty (30) days
after the Effective Date, or a mutually acceptable Work Order after good faith
efforts thirty (30) days after the Effective Date, either party may terminate
this Agreement by providing the other party with written notice of such
termination. Termination under this section shall not relieve Client from the
obligation of paying SI for all fees due and outstanding as of the date of such
termination.
(b) Upon completion of mutually acceptable Specifications and a
Work Order, and SI's receipt of any fees that may be due under Section 3, SI
shall commence work for the SI Services by assigning its personnel to perform
the SI Services.
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(c) The Parties agree to hold weekly project status meetings
between their respective project managers for this project, and monthly
management meetings between their respective managers responsible for overseeing
this project.
3. PAYMENT TERMS.
(a) The Work Order shall state that payment for SI Services under
this Agreement is on a "time and materials" basis.
(b) Client will be invoiced on a monthly basis for SI's services
provided pursuant to this Agreement on a time and materials basis. SI's services
will be billed according to its Standard Rate Card (a copy of which is annexed
hereto and labeled as Exhibit D) less any applicable discount. SI shall not
change its rate during the Term (as defined below) and agrees to provide Client
with written notice of any hourly rate increases at least 90 days before any
Additional Term (as defined below). SI will also bill Client for reasonable
out-of-pocket costs and expenses incurred in the course of SI's performance of
its obligations hereunder, including but not limited to, travel, non-SI software
and related office expenses, at cost.
(c) Client agrees to pay SI's monthly invoices for all charges as
set forth therein within thirty (30) days after the invoice date, provided that
SI shall have the right, at its sole discretion from time to time, to receive
payment of up to thirty-five percent (35%) of the total amounts set forth in all
invoices hereunder on a cumulative basis (the "Total Invoice Amount"), by
delivery of shares of the common stock, par value $.001 per share (the "Common
Stock"), of Client equal to the applicable portion of the then-current invoice
to be received by SI as Common Stock as provided above in this paragraph (c)
(the " Stock Amount") divided by the Stock Price then in effect. For purposes of
this Agreement, the Stock Price shall be $10.00 per share as adjusted pursuant
to Section 3(d) hereof. Client need not issue fractional shares of Common Stock
to SI in payment of the Stock Amount, but at its option, Client may pay the
remaining Stock Amount attributable to such fractional share in cash or the
amount shall be carried forward and added to the next subsequent invoice.
(d) The initial Stock Price of $10.00 per share shall be
equitably adjusted, as agreed by Client and SI if Client shall (i) issue any
Common Stock as a dividend or distribution on its outstanding Common Stock; (ii)
issue to all holders of Common Stock rights, options or warrants to purchase
Common Stock at less than current market price; or (iii) subdivide, combine or
reclassify its existing Common Stock.
(e) In addition to payment of the monthly invoices as described in
Sections 3(b) and 3(c), Client shall pay to SI, at the earlier either of the
date that Client launches the Site or the 60th day after Acceptance of the final
Deliverable under to this Agreement and Work Orders hereto (the "Bonus Payment
Date"), an amount equal to 35% of the Total Invoice Amount (the "Bonus Amount"),
which shall be paid by delivery of such number of shares of Common Stock as is
equal to the Bonus Amount divided by Stock Price then in effect.
(f) No later than the 30th day following the applicable monthly
invoice date or the Bonus Payment Date, as applicable, Client shall deliver to
SI fully-executed certificates for the applicable number of shares of Common
Stock to be issued to SI on such date; provided, that from and after each such
30th day or the Bonus Payment Date, SI shall be deemed the owner of such shares
of Common Stock with all the rights and privileges attributable to such shares
whether or not the certificates
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representing such shares are delivered to SI. The certificates for the shares
may set forth customary private placement legends.
4. CLIENT MATERIALS; LICENSE. Client shall promptly deliver Client
Materials, whenever it is so requested by SI, in an electronic file format to be
specified and accessible by SI, or otherwise as specified in the Specifications.
Any charges or expenses SI may incur due to Client Materials not conforming to
such format shall be paid by Client, and any delay in performing the SI Services
due to such non-conformity or delay in delivery by Client shall constitute a
Material Change (as defined below). Client hereby grants to SI a non-exclusive,
worldwide, royalty-free license to reproduce, edit, modify, adapt, translate,
display, exhibit, publish, transmit, distribute, perform and otherwise use
Client Materials as necessary to perform the SI Services. Client assumes sole
responsibility for acquiring any consent, authorization or license necessary for
use of the Client Materials by SI.
5. ACCEPTANCE OF DELIVERABLES, MATERIAL CHANGES.
(a) Acceptance. Client shall have ten (10) business days, or such
Acceptance Period as may be otherwise specified in the Work Order, to review
each Deliverable. Client may (i) accept a Deliverable as delivered
("Acceptance") or (ii) reject a Deliverable by reason of failure by such
Deliverable to substantially conform to the Specifications current at the time
of its delivery. Client shall notify SI of such rejection promptly in writing,
within the Acceptance Period, and providing all available information in
reasonable detail to enable SI to correct such non-conformity, failing which
notification such Deliverable shall be deemed Accepted.
(b) Rejection. Upon notification of rejection as specified in
Section 5(a), SI shall thereupon have fifteen (15) business days to correct the
non-conformity without additional charge to Client and resubmit the Deliverable,
in which case the procedure for the review and Acceptance of such Deliverable
(as set forth in Section 5(a) above) shall be repeated for up to a total of two
(2) rejections and re-submissions, or until such Deliverable is Accepted,
whichever occurs first.
(c) Material Change. In the event of any Material Change (as
defined below), SI shall notify Client in writing of any changes to the scope of
SI Services as may be necessary, as soon as possible after SI becomes aware of
the Material Change, and shall provide Client promptly thereafter with estimates
for the relevant revisions and changes, which Client shall not unreasonably
reject; provided, however, that in addition to any such changes as may be
proposed by SI, any Material Change that delays SI's completion of a milestone
or delivery of a Deliverable due to Client's delay in meeting or performing its
obligations under this Agreement shall result in an automatic extension of such
milestone or delivery date by the period of such Client delay. A "Material
Change" shall mean an event beyond SI's reasonable control which would affect
SI's performance of its obligations in relation to the scope of SI Services
(including without limitation delivery of Deliverables, milestone completion,
payment terms or scheduling). In no event will SI be penalized for a Material
Change.
6. CHANGE ORDERS. If, during the Term of this Agreement, Client wishes to
implement any changes or revisions that deviate in any material respect from the
Specifications or the Work Order, Client shall submit a Change Order to SI
specifying such changes or revisions in detail. SI shall promptly review the
Change Order and submit to Client a written proposal for implementing such
changes or revisions, including any price changes. Client shall have ten (10)
business days from receipt of SI's proposal to accept or reject such proposal in
writing. Upon Client's acceptance, the Change Order, as supplemented and/or
modified by SI's proposal, shall amend and become part of the Specifications or
Work Order, as applicable. SI shall have no obligation to perform any of the
services
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described in any Change Order or proposal thereto, unless and until Client has
accepted such proposal in accordance with the terms herein.
7. SI'S RESPONSIBILITIES. In addition to any other obligations under this
Agreement or a Work Order, SI shall (i) assign experienced professionals to work
on the SI Services; (ii) assign a project manager who will direct the day-to-day
activities of these professionals; (iii) work in conjunction with Client to
deter-mine the scope of work of the SI Services and corresponding Work Orders;
(iv) perform its obligations under this Agreement in a professional and
workmanlike manner; and (v) use commercially reasonable efforts to code
generically with respect to Deliverables.
8. CLIENT'S RESPONSIBILITIES. In addition to any other obligations under
this Agreement or a Work Order, Client shall (i) pay SI's invoices in a timely
manner; (ii) provide SI with all reasonable assistance in the performance of the
SI Services, including without limitation access to Client's personnel, Site and
facilities; (iii) promptly provide all Client Materials as may be necessary for
SI to perform the SI Services, (iv) approve SI's reasonable requests for changes
in team composition; and (v) cooperate with any other reasonable SI request to
enable SI to perform its duties hereunder, including without limitation any
change in the scope of work or schedule of work hereunder and SI requests for
approvals to Client, AFS or other third parties. Client hereby acknowledges that
the timely performance and completion of the SI Services is highly dependent on
Client's prompt approval (where applicable) of and cooperation in relation to
the SI Services, including without limitation any approvals or cooperation
necessary in connection with the Specifications, designs, storyboards and the
delivery of Client Materials. Any delay in performing SI Services arising from
Client's failure to timely approve or cooperate shall be deemed a Material
Change.
9. TERM AND TERMINATION.
(a) Term. The term of this agreement shall be one (1) year from
the Effective Date (the "Term"), or until completion of all SI Services under
this Agreement, whichever first occurs, unless earlier terminated in accordance
with the provisions of this Agreement. The Term may be extended by mutual
agreement prior to the expiration of the Term.
(b) Termination for Material Breach. Either party may terminate
this Agreement in the event of a material breach by the other party that remains
uncured for a period of thirty (30) days after written notice of such breach.
Each party will negotiate in good faith with the other during such thirty (30)
days notice period to attempt to resolve any dispute associated with the alleged
material breach, provided that the Agreement shall terminate at the end of such
period if any party is not satisfied with the proposed resolution of such
dispute.
(c) Return of Confidential Information. Upon the expiration or
termination of this Agreement, each party shall promptly return to the other
party all Confidential Information of such other party not under a valid
license.
(d) ST Termination. In the event SI terminates the Agreement for
Client's material uncured breach, Client shall promptly pay SI any fees and
amounts outstanding as of the date of such termination, either for "time and
materials" billed through the effective date of termination, or for both
Deliverables in progress and completed Deliverables, up to the later of the
effective date of termination or the next scheduled Deliverable, as applicable
according to the payment terms set forth in a Work Order.
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(e) Client Termination. In the event Client terminates the
Agreement for SI's material uncured breach, SI will, in good faith and only upon
Client's request, provide to a third party designated by Client to perform the
SI Services, all information related to the project only to the extent necessary
for such third party to perform such SI Services; provided, however, that such
third party shall execute a confidentiality agreement reasonably satisfactory to
SI with respect to any Confidential Information of SI (as defined below), prior
to the receipt of such information.
10. TRADEMARK LICENSE AND PUBLICITY. Client hereby grants SI the right to
use its trade names, trade marks and logos in SI's promotional and publicity
materials, including SI's Web site, subject to Client's prior written consent,
which shall not be unreasonably withheld. Client further agrees to attribute SI
as the developer of the Site, by means of icons, images and text to be mutually
agreed, and to include a hypertext link to SI's site known as Snickelways
Interactive (currently located at "http://www.snickelways.com") from mutually
agreed upon locations) of the Site. SI shall have the right to publicly announce
its involvement in the development of the Deliverables for Client. The parties
shall cooperate in good faith in preparing any joint press or other publicity
release relating to the subject matter and/or terms of this Agreement, provided,
however that each party shall obtain the prior written consent of the other
party prior to the issuance of any such joint press or other publicity release.
Except as provided in this paragraph, neither party shall use any trademarks,
trade names or logos of the other party without such party's prior written
consent.
11. OWNERSHIP AND RELATED LICENSES.
(a) Original Code. SI shall own all right, title and interest in
and to the Original Code.
(b) Custom Software and Deliverables. Subject to SI's ownership
rights in the Original Code, Client shall own all right, title and interest in
and to the Custom Software and the Deliverables, and SI acknowledges and agrees
that the Custom Software and the Deliverables under this Agreement shall be
considered "work[s] made for hire" under the U.S. Copyright Act, 17 U.S.C. 101
et seq., and any right, title and interest in such Custom Software and
Deliverables, including without limitation all copyrights, patent rights, trade
secrets, trademarks and other proprietary rights thereto, will belong solely to
Client. To the extent that any Custom Software or Deliverable is not considered
a work made for hire, SI hereby assigns and transfers to Client all of SI's
right, title and interest therein.
(c) SI Development Tools. Notwithstanding anything to the contrary
herein, nothing in this Agreement shall be read to grant Client any right, title
or interest in (i) any of SI's pre-existing or independently developed software
applications, development tools, data files and any documentation relating to
the foregoing, and any modifications, fixes or enhancements thereto made by SI
in the course of performing its obligations under this Agreement; (ii) SI's
general knowledge, skills, techniques and know how developed prior to, during or
after this Agreement, including without limitation its expertise and skills in
WWW consulting, Web site design and development and related software design and
development; (iii) the Original Code; and (iv) all patents, copyrights, trade
secrets and other proprietary rights in subparagraphs (i), (ii) and (iii) herein
(collectively, "SI Development Tools"). Moreover, nothing in this Agreement
shall be deemed to transfer any ownership interest in any intellectual property
rights (including without limitation any copyrights) held by third parties in
third party software used by SI in performing its services under this Agreement,
and SI shall be free to use all such knowledge, skills, programming and other
materials in subparagraphs (i), (ii) and (iii) without restriction.
(d) Client License Rights. In consideration for and contingent
upon the discharge of Client's payment obligations under and subject to the
other terms and conditions of this Agreement, SI
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hereby grants to Client a perpetual, royalty-free, non-exclusive, sub-licensable
(through multiple tiers) license to use and modify the SI Development Tools
which are incorporated in the Custom Software and the Deliverables to maintain,
update develop or enhance the Custom Software, the Deliverables and/or the Site,
including for the benefit of third parties, provided, however, that Client's use
of the SI Development Tools pursuant to the foregoing license shall be limited
to the category of Web sites set forth in Exhibit E attached hereto until one
(1) year after the termination of this Agreement. All right, title and interest
in any modifications and derivative works made by Client from the SI Development
Tools in accordance with the terms of the license granted herein shall inure to
the benefit of Client, subject to the ownership rights of SI in the SI
Development Tools as set forth in this Agreement, and subject further to the
license granted to Client in this paragraph. Notwithstanding anything to the
contrary herein, Client shall not directly or indirectly sublicense or otherwise
transfer any SI Development Tools to any direct competitor of SI. In addition,
any sublicense granted by Client in the SI Development Tools shall be subject to
a written agreement whereby the sublicensee shall be required, with respect to
any proprietary or confidential SI information, to maintain at least an equal
standard of care (but in no event less than a reasonable standard of care) as is
required of Client pursuant to the terms of this Agreement. Nothing in this
Agreement shall create any restriction or limitation whatsoever on SI's right to
use the SI Development Tools, including, without limitation, in connection with
other projects for third parties. SI shall be permitted to retain a copy of the
Custom Software and the Deliverables for the purposes as set forth in this
Agreement. All rights not expressly granted by SI herein are hereby expressly
reserved.
(e) SI License Rights. Client hereby grants to SI a perpetual,
royalty-free, non-exclusive, sub-licensable (though multiple tiers) license, to
reproduce, adapt, distribute, execute, create derivative works of, use and
modify the Custom Software and the Deliverables in connection with SI's
development and consulting services, provided, however, the foregoing license
shall not be deemed to permit SI to use the Custom Software and/or the
Deliverables to perform any development or consulting services for the category
of Web sites defined in Exhibit E attached hereto until one (1) year after the
termination of this Agreement. All right, title and interest in any
modifications and derivative works made by SI from the Custom Software and/or
the Deliverables in accordance with the terms of the license granted herein
shall inure to the benefit of SI, subject to the ownership rights of Client in
the Custom Software and the Deliverables as set forth in this Agreement.
(f) Perfection of Rights. Each party shall cooperate with the
reasonable requests of the other party to execute such documentation as may be
necessary to protect the requesting party's respective ownership interests as
recognized by the Parties hereunder, at the expense of the requesting party.
12. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
(a) Client represents and warrants that it has sufficient right,
title, interest or permission in and to the Client Materials, for SI to use such
Client Materials as is contemplated by this Agreement. Client further warrants
and represents that the Client Materials will not to its knowledge infringe any
copyrights, patents, trade secrets, trademarks, service marks, rights of privacy
or publicity of any third party, nor will they to Client's knowledge defame or
libel any person or entity. Client hereby agrees to defend, indemnify and hold
harmless SI, its principals, agents, directors, officers and employees from and
against any and all claims arising from or related to Client's breach of any of
the foregoing representations and warranties. The foregoing indemnity obligation
is conditioned upon (i) prompt written notice by SI to Client of any such claim
of which SI becomes aware, (ii) Client's complete
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control of the defense of any such claim, and (iii) SI's reasonable cooperation
with Client, at Client's expense, in defending against such claim.
(b) SI represents and warrants that it has sufficient right,
title, interest or permission in and to such content and materials as are
incorporated in the Deliverables, for Client to make use of such Deliverables as
is contemplated by this Agreement. SI further represents and warrants that the
Site is Year 2000 compliant and that the Deliverables as delivered do not to its
knowledge infringe any copyrights, patents, trade secrets, trademarks, service
marks, rights of privacy or publicity of any third party, nor will they to SI's
knowledge defame or libel any person or entity. SI hereby agrees to defend,
indemnify, and hold harmless SI, its principals, agents, officers, directors and
employees from and against any and all claims arising from or related to SI's
breach of any of the foregoing representations and warranties. The foregoing
indemnity obligation is conditioned upon (i) prompt written notice by Client to
SI of any such claim of which Client becomes aware, (ii) SI's complete control
of the defense of any such claim, and (iii) Client's reasonable cooperation with
SI, at SI's expense, in defending against such claim.
(c) SI warrants that the Deliverables will function in substantial
conformity with the then-current Specifications for a period of ninety (90)
days: (i) after Acceptance of the Deliverables (if Client does not elect to
purchase Maintenance Services (as defined below) beginning immediately upon
Acceptance of the initial Deliverables); or (ii) after the end of the applicable
period during which Maintenance Services are provided to Client (if Client
elects to purchase Maintenance Services beginning immediately upon Acceptance of
the initial Deliverables). Client's sole and exclusive remedy for breach of this
warranty is for SI to use commercially reasonable efforts to correct any such
non-conformity, including, as appropriate, repairing or replacing any defective
media. Client shall provide SI with all available information and assistance to
correct such non-conformity. The warranties made by SI under this Agreement
shall be void if the Deliverables are modified by anyone other than SI or an
authorized agent of SI, or if the Deliverables are not used in accordance with
the Specifications. At Client's request at any time up to one (1) year after the
termination of this Agreement (except for termination pursuant to Section 9(b)),
SI shall perform maintenance services (the "Maintenance Services") for the
Custom Software and the Deliverables, and the SI Development Tools incorporated
therein, in accordance with SI's then-current maintenance policies and
procedures and terms and conditions. Payment for the Maintenance Services shall
be exclusive of and in addition to any payment due for SI Services under this
Agreement, and shall be at SI's then-current rates.
13. SCOPE OF WARRANTIES; LIMITATION OF LIABILITY. EXCEPT FOR THE
EXPRESS REPRESENTATIONS AND WARRANTIES OF THE PARTIES AS SET FORTH IN THIS
AGREEMENT, NEITHER PARTY EXTENDS ANY WARRANTIES OF ANY KIND, WHETHER EXPRESS OR
IMPLIED, TO THE OTHER PARTY, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD
PARTY RIGHTS. SI DOES NOT WARRANT THAT THE CUSTOM SOFTWARE OR DELIVERABLES WILL
BE ERROR-FREE, OR THAT THE SERVICES WILL BE UNINTERRUPTED, OR THAT THE CUSTOM
SOFTWARE OR THE DELIVERABLES WILL YIELD OR ACHIEVE ANY PARTICULAR RESULTS OR
CORRECTLY PROCESS, STORE, EXCHANGE, OUTPUT OR DISPLAY ALL DATE INFORMATION AND
DATE DATA. SI MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO
ANY THIRD PARTY SOFTWARE, HARDWARE, OR OTHER MATERIALS OR CONTENT WHICH MAY BE
USED IN THE DEVELOPMENT OF OR INCORPORATED IN THE CUSTOM SOFTWARE OR THE
DELIVERABLES. EXCEPT FOR THE PARTIES' INDEMNITY OBLIGATIONS IN SECTION 12(A) AND
(B), (I) NEITHER PARTY SHALL BE LIABLE FOR ANY CLAIM ARISING OUT OF THIS
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AGREEMENT FOR INDIRECT, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES, EVEN IF
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (II) SI'S
AGGREGATE LIABILITY UNDER THIS AGREEMENT FOR ANY AND ALL CLAIMS, WHETHER IN
CONTRACT, TORT, OR OTHERWISE, SHALL NOT EXCEED THE TOTAL DOLLAR AMOUNT OF THE
FEES ACTUALLY RECEIVED BY SI FOR ITS SERVICES TO CLIENT UNDER THIS AGREEMENT.
14. CONFIDENTIALITY. Each party acknowledges that any and all information
relating to the other's business, in any form, including, but not limited to,
all information which is produced or developed under this Agreement and/or in
connection with a Work Order, and the terms of this Agreement shall be treated
as confidential information ("Confidential Information"). Each party agrees that
it will use the other's Confidential Information only in connection with the
performance of its obligations pursuant to this Agreement, and shall not
disclose any such Confidential Information, either during the term of this
Agreement, or any time thereafter, except with the prior written consent of the
disclosing party, and shall take every reasonable precaution to safeguard all
such Confidential Information. Each party shall inform all of its employees,
agents or representatives having access or exposure to Confidential Information,
of such party's obligations under this paragraph and shall have each such
employee, agent or representative agree to abide by these or similar terms.
Notwithstanding the foregoing, information shall not be considered confidential
if such information is or becomes part of the public domain through no fault of
the receiving party, is information which the receiving party can document was
known to it prior to disclosure by the disclosing party, or is information
subsequently received by either party from a third party without restriction as
to disclosure.
15. NON-SOLICITATION. Both Parties hereby agree not to solicit each other's
employees or contractors for employment for a period commencing on the Effective
Date and extending to one (1) year after receipt by SI of Client's final payment
pursuant to this Agreement. In the event a party breaches this term, the
breaching party will pay, as liquidated damages and not a penalty, within thirty
(30) days of receipt of a notice of breach, a sum equal to two (2) years of
salary or fees the non-breaching party would pay to its employee or contractor.
16. FORCE MAJEURE. Except as otherwise provided by this Agreement, neither
party shall be liable hereunder by reason of any failure or delay in the
performance of its obligations hereunder on account of strikes, shortages,
riots, insurrection, fires, floods, earthquakes, explosions, war, governmental
action, acts of God or any other cause beyond the reasonable control of such
party.
17. NOTICES. Any notice required to be given under this Agreement shall be
in writing, and sent by certified mail, or overnight courier, to the recipient
at its address listed in this Agreement, or to such other address as it may, by
notice as aforesaid, subsequently designate.
18. INDEPENDENT CONTRACTOR. It is expressly understood that SI and Client
are independent contractors, and that neither has the authority to bind the
other to any third party or otherwise to act in any way as a representative of
the other, unless otherwise expressly agreed to in writing signed by both
parties to this Agreement.
19. ASSIGNMENT. Neither party shall assign or transfer this Agreement, or
any rights, duties, obligations or interests therein, without the other party's
prior written consent (such consent not to be unreasonably withheld or delayed).
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20. ENTIRE AGREEMENT, NO WAIVER OR MODIFICATION. This Agreement constitutes
the entire agreement between SI and Client with respect to the subject matter
contained herein, and supersedes any and all prior understandings, agreements,
and proposals with regard to the subject matter hereof. No waiver, modification,
alteration or amendment of any of the terms or conditions contained herein shall
be effective unless and until set forth in writing, duly signed by SI and
Client.
21. SEVERABILITY; HEADINGS. In the event any provision of this Agreement or
portion thereof is determined by a court of competent jurisdiction to be
invalid, illegal, or otherwise unenforceable, such provision shall be deemed to
have been deleted from this Agreement, while the remainder of this Agreement
shall remain in full force and effect according to its terms. The section
headings in this Agreement are inserted only as a matter of convenience and in
no way define or limit the scope or extent of such section, or affect the
construction of this Agreement.
IN WITNESS HEREOF, the parties hereto have executed this Agreement as
of the date first above written by their duly authorized representative.
SNICKELWAYS, INC.
By: /s/ Paul Cimino
------------------------
Paul Cimino
Chief Executive Officer
WORLD COMMERCE ONLINE, INC.
By: /s/ John R. Daniel II
------------------------
John R. Daniel II
Executive Vice President
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EXHIBIT A
SPECIFICATIONS
Specifications for Work Orders WCO 0001, 0002, and 0003 are included in
electronic files attached to this agreement in email form.
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WORK ORDER
EXHIBIT B
PREPARED BY: Lee Smith
SENT TO: Jack Daniel, EVP, World Commerce Online
DATE: September 22, 1999
WORK ORDER WCO 0001
SUMMARY OF WORK & ESTIMATED TIMETABLE
SCOPE OF WORK
FLORASHOPS WEBSITE
Snickelways will develop and/or implement the following:
o Functional Specifications Document.- This will outline the functional
requirements for the new features to the site that are expected to
launch in the week of September 15, 1999.
o Technical Specifications Document: This will outline the technical
requirements for the new features to the Florashops.com site expected
to be launched in the week of September 15, 1999.
o Web page Designs: Snickelways develop designs for templates to be
selected by Florists at the time the become part of the Florashops.
o Web Page Production.- Snickelways will develop all required dynamic
templates for the Florashops. (As outlined in the Functional
Specifications and Storyboards.) WCO staff will be responsible for
providing the content and populating product, occasions and florist
databases using the publishing/administration tool, or by providing
data for databases in digital format.
o Florashops. com Feature:.
o OPEN-TO-THE-PUBLIC INTERNET COMMERCE SITES.
o UMBRELLA PAGES:
o Persistent Navigation includes links to Florapedia,
Plantpedia, Help, FAQs, and "Find a Local Florist "
search.
o Advertising space available for standard banner and
smaller "billboard" throughout
o Homepage
o WCO controls large feature most likely based
on season/occasion
o Search by "local zip code " and by "city
o Holiday Calendar
o Month-at-a-glance view of upcoming holidays
and gift giving occasions.
o Managed by WCO personnel centrally with
simple admin tool to add/delete items in
advance, set hyperlinks to static feature
page with links to "Find a Florist
o Help/FAQ's/Tips
o Contact WCO
o Email form capturing basic information and
comments.
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o Forwarded to WCO Customer Service
o Florashops - Individual Florist Page Features
o Persistent Navigation
o Seasonal Specials Pages
o Occasions Page
o Product Category Pages
o Contact US
o Reminder Service
o Map to the store
o Back to Florashops.com
o Shopping Cart
o Florist Homepage
o Florist's logo art and basic address
information
o One banner controlled by WCO
o 3 Product Features (on controlled centrally
by WCO) with product descriptions, prices,
linked to product pages
o Seasonal Specials Page
o Product Category Pages
o Arrangements, Plants, Gift Baskets, etc. - list to be
provided by WCO, activation dependent on florist
selecting product from that category for their shops
offering
o Occasions Pages
o List to be provided by WCO, Occasion list
managed centrally by WCO.
o Contact US
o Form forwarded to individual Florist's email address.
o Can be routed to WCO or written to Dbase for future
datamining - Business Decision
o Reminder Service
o Within individual florist's (host) pages,
but decision not yet final on database
structure
o Map to the store o Shopping Cart/Checkout
o Payments
o Credit card only- Assume VISA, Mastercard, AMEX
o Credit card is validated by system, card
number, pertinent name/address and total
transaction amount information for entire
order passed to Florist.
o Manage-My-Shop Features
o Selection Guide
o Selection Templates
o Shop Maintenance
o Product Selection
o Upload My Product
o Upload Local Product
o Master Catalog
o Administration Tool for Publishing Site Content as
required to Phase II features
ESTIMATED COST
The estimated cost for the Florashops project at onset of the project, excluding
subsequent revisions and enhancements, was approximately $350,000.
PAYMENT [X] Time & Materials [ ] Fixed Project
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Note: per Web Site Development Agreement, invoices will based on actual
time and materials, to be paid 65% in cash, 35% in WCOL Stock @$10.00 per share,
net 30 days from invoice date.
ASSUMPTIONS
In preparing this estimate, Snickelways assumes the following:
o WCO personnel will provide design approvals, feedback, and client
deliverables on the dates specified, in order to maintain the project
schedule.
o All editorial content will be developed by WCO. Content for dynamic
pages will be placed into the publishing/admin tool by WCO staff.
o Editorial content for placement in flat HTML files will be provided to
Snickelways in an electronic format (e.g., MS Word) suitable for
editing into HTML documents
o Time and materials approach allows for a less restrictive and more
creative development process.
o Costs of Hardware, Software, and Hosting are not included in this
estimate. Snickelways will make recommendations to WCO.com for the most
cost-effective procurement solutions during the development process (as
indicated in the Technical Specifications Document).
o Sales tax, if applicable, is not included in the price. Travel and out
of pocket materials costs are additional.
o Invoices will be sent monthly and are payable net 30 days.
o WCO will be responsible for acceptance testing. This enhances the
website quality and thoroughness and insures a mutually agreeable final
product delivery.
o Extensive delays in deliverables and/or approvals of interim work
product such as specifications and designs from WCO that result in a
launch delay of comparable length may generate additional costs.
o Extensive delays in deliverables from Snickelways Interactive that
result in a launch delay of comparable length may generate price
reductions.
================================================================================
THE ABOVE WORK ORDER IS AGREED TO AND ACCEPTED BY:
For WCO: For Snickelways:
Signature: Signature:
------------------------ -----------------------
Name: John R. Daniel II Name: Paul Cimino
Title: Executive Vice President Title: Chief Executive Officer
Date: October 12, 1999 Date: October 14, 1999
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WORK ORDER
PREPARED BY: Lee Smith
SENT TO: Jack Daniel, EVP, World Commerce Online
DATE: September 22, 1999
WORK ORDER: WCO 0002
SUMMARY OF WORK & ESTIMATED TIMETABLE
SCOPE OF WORK
FLORAMALL WEBSITE
The Floramall is composed of Floral Wholesalers' and Suppliers' (vendors)
electronic commerce catalog web sites. The sites are built on a common database
structure, and will be generated using common templates with limited
customization of look and feel. Each participating vendor will control the
content of their site, promotions and the catalog product database.
Snickelways will develop and/or implement the following:
o Functional Specifications Document.- This will outline the functional
requirements for the new features to the site that are expected to
launch in the week of September 15, 1999.
o Technical Specifications Document.- This will outline the technical
requirements for the new features to the Florashops.com site expected
to be launched in the week of September 15, 1999.
o Web page Designs.- Snickelways develop designs for templates to be
selected by Florists at the time the become part of the Florashops.
o Web Page Production.- Snickelways will develop all required dynamic
templates for the Florashops. (As outlined in the Functional
Specifications and Storyboards.) WCO staff will be responsible for
providing the content and populating product, occasions and florist
databases using the publishing/administration tool, or by providing
data for databases IN digital format.
o Floramall Features.
o MEMBERSHIP ONLY BUSINESS-TO-BUSINESS INTERNET COMMERCE SITES.
o Search
o Search by vendor
o Search by product
o Advanced search by product allows shopper to narrow
the search by category find vendor.
o First time shoppers guide
o Basic "how to shop " issues,- security, contact
information, search, browse, drill (town, use
shopping lists, navigation tips, anti other FAQs as
required (WCO will supply)
o Shopping Cart
o Floramall will allow shoppers to select items for
purchase from multiple vendors, with a single
checkout process and point of payment.
o The system will show shopping cart totals by
vendor, and subtotal by vendor before
finalizing checkout.
o The system will parse the orders to
individual vendors. A financial system will
credit the sales to individual vendors
"Floraplex Clearinghouse Accounts
o Order History
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o Shoppers order history for each individual
vendor will be captured in a database and be
viewable by shoppers through a number of
reports including by month, and by category.
o Item Pages
o Drill Downs/Merchandise Hierarchy
o Shopping Lists
o Available Today
o Promotions
o Other Features
o Advertising Banners
o Payments by Trade Terms
o Order Capture and Transmission
o Checkout will allow single transaction for
multiple vendors. System will parse and send
to vendors in appropriate format.
o Data Exchange Formats offered will be Email
or Batch File Transfer
o Hot Specials (Auctions)
o An optional promotional feature.
o Store Management Features
o Store Management/Customer Approval
o Vendors will be allowed to "close the store"
o An approval process will be available for new
shoppers
o Vendor Information
o Limited homepage content such as Vendor logo, About
Us, Operating Hours, Policies will be allowed all
posted to the site by a simple browser-based
publishing tool.
o "About Us" page
o Product Management
o Manage My Profile (Florist's My Floramall)
o Manage my Address Book
o Manage my Shopping Lists
o Choose my Preferred Wholesalers
o Chose my Preferred Categories
ESTIMATED COST
The estimated cost for the FloraMall project at onset of the project, excluding
subsequent revisions and enhancements, was approximately $375,000.
PAYMENT [X] Time & Materials [ ] Fixed Project
Note: per Web Site Development Agreement, invoices will based on actual
time and materials, to be paid 65% in cash, 35% in WCOL Stock @$10.00 per share,
net 30 days from invoice date.
ASSUMPTIONS
In preparing this estimate, Snickelways assumes the following:
o WCO personnel will provide design approvals, feedback, and client
deliverables on the dates specified, in order to maintain the project
schedule.
o All editorial content will be developed by WCO. Content for dynamic
pages will be placed into the publishing/admin tool by WCO staff.
16
<PAGE> 17
o Editorial content for placement in flat HTML files will be provided to
Snickelways in an electronic format (e.g., MS Word) suitable for
editing into HTML documents
o Time and materials approach allows for a less restrictive and more
creative development process.
o Costs of Hardware, Software, and Hosting are not included in this
estimate. Snickelways will make recommendations to FloraMall for the
most cost-effective procurement solutions during the development
process (as indicated in the Technical Specifications Document).
o Sales tax, if applicable, is not included in the price. Travel and out
of pocket materials costs are additional.
o Invoices will be sent monthly and are payable net 30 days.
o WCO will be responsible for acceptance testing. This enhances the
website quality and thoroughness and insures a mutually agreeable final
product delivery.
o Extensive delays in deliverables and/or approvals of interim work
product such as specifications and designs from WCO that result in a
launch delay of comparable length may generate additional costs.
o Extensive delays i n deliverables from Snickelways Interactive that
result in a launch delay of comparable length may generate price
reductions.
================================================================================
THE ABOVE WORK ORDER IS AGREED TO AND ACCEPTED BY:
For WCO: For Snickelways:
Signature: Signature:
------------------------ -----------------------
Name: John R. Daniel II Name: Paul Cimino
Title: Executive Vice President Title: Chief Executive Officer
Date: October 12, 1999 Date: October 14, 1999
17
<PAGE> 18
WORK ORDER
PREPARED BY: Lee Smith
SENT TO: Jack Daniel, EVP, World Commerce Online
DATE: October 13, 1999
WORK ORDER #: WCO003
SUMMARY OF WORK & ESTIMATED TIMETABLE
SCOPE OF WORK
AFS Extranet (and preview Website)
The AFS Extranet is a Business-to-Business website whose access is limited, with
a few exceptions, to AFS Member Florists. The Extranet's primary purpose is to
provide service to member florists, which it does in many ways. It provides
access to AFS general information arid individual member account information. It
provides multiplex ways of contacting AFS including the ability to send email to
specific departments. Member florists will be able to complete monthly delivery
reports (101s) online. AFS departments will be able to complete monthly delivery
reports (101s) online. AFS departments will be able to communicate with member
florists. Member florists will have the opportunity to publish information for
other florists to see, and to see what other florists have published.
Snickelways will develop and/or implement the following:
o Functional Specifications Document: This will outline the functional
requirements for the new features to the site that are expected to
launch in the week of September 15, 1999.
o Technical specifications Document: This will outline the technical
requirements for the new features to the Florashops-com site expected
to be launched in the week of September 15, 1999.
o Web page Designs: Snickelways develop designs for templates to be
selected by Florists at the time the become part of the Florashops.
o Web Page Production.- Snickelways will develop all required dynamic
templates for the Florashops. (As outlined in the Functional
Specifications and Storyboards.) AFS staff will be responsible for
providing the content and populating product, occasions and florist
databases using the publishing/administration tool, or by providing
data for databases in digital format.
o Extranet Features:
o MEMBERSHIP ONLY BUSINESS-TO-BUSINESS INTERNET SITES.
o HOME PAGE AND PERSISTENT NAVIGATION
o PUBLICATIONS DEPARTMENT
o Publications Main Page
o Education Department
o Education Main Page
o AFS History
o Ask the Experts
o Care And Handling
o Contact AFS Education
o Education Calendar
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<PAGE> 19
o Floral Trends
o Marie Ackerman Library
o Online Study
o Survey
o TECHNOLOGY SOLUTIONS DEPARTMENT
o Technology Solutions Main Page
o Contact ATS Technology
o Products and Services
o Technology Sales
o Support
o Technology Calendar
o Faqs / Ask The Experts
o CUSTOMER CARE DEPARTMENT
o AFS Policy Changes
o Contact Customer Service
o Enter 101s
o International Order Form
o Online Order History
o Online Statement
o Statement Adjustment
o MEMBER SERVICES DEPARTMENT
o Contact Member Services
o Change My Directory Listing
o Manage My B2B Page
o Submit New Directory Ad
o Administrative/Publishing tools to upload and index newly created
content pages as required by AFS internal personnel.
ESTIMATED COST
On the instruction of WCO management, this project was terminated on September
2, 1999. At that point SI had completed the following deliverables and project
milestones:
o Discovery Meetings in April and May in Oklahoma and NYC.
o Development of static storyboards, site flow charts, and
proposed navigation.
o Functional Specifications Documentation -- First Draft
Completed August 5, 1999
o Functional Documentation submitted to AFS for review.
o New Information from Process Review Sessions conducted August
17, 18 in OKC have -not been incorporated into the extranet
Functional Specifications,
o Completed Extensive Extranet Prototype, which include approved
GUI, and design, content sections, navigation graphic elements
and content templates.
o Client Review Meeting, August 8, 1999 - Extranet Prototype by
AFS
o Extranet Meeting Summary Documentation, August 20, 1999 - This
outlines AFS's comments, changes and revisions based on the
Prototype.
o ASP Content Publishing Upload Tool - functional prototype
completed.
Note: Much of the early discovery and Specifications development for the
Florashops project was billed to this project account.
19
<PAGE> 20
The Grand total for work completed as of cessation of work on September 2. 1999
was $159,414.00.
PAYMENT [X] Time & Materials [ ] Fixed Project
ASSUMPTIONS
In preparing this estimates Snickelways assumes the following:
o AFS personnel will provide design approvals, feedback, and client
deliverables on the dates specified, in order to maintain the project
schedule.
o All editorial content will be developed by AFS. Content for dynamic
pages will be placed into the publishing/admin tool by AFS staff.
o Editorial content for placement in flat HTML files will be provided to
Snickelways in an electronic format (e.g., MS Word) suitable for
editing into HTML documents
o Time and materials approach allows for a less restrictive and more
creative development process.
o Costs of Hardware, Software, and Hosting are not included in this
estimate. Snickelways will make recommendations to AFS,com for the most
cost-effective procurement solutions during the development process (as
indicated in the Technical Specifications Document).
o Sales tax, if applicable, is not included in the price. Travel and out
of pocket materials costs are additional.
o Invoices will be sent monthly and arc payable net 30 days.
o AFS will be responsible for acceptance testing. `I-his enhances the
website quality and thoroughness and insures a mutually agreeable final
product delivery,
o Extensive delays in deliverables and/or approvals of interim work
product such as specifications and designs from AFS that result in a
launch delay of comparable length may generate additional costs.
o Extensive delays in deliverables from Snickelways Interactive that
result in a launch delay of comparable length may generate price
reductions.
================================================================================
THE ABOVE WORK ORDER IS ACCEPTED TO AND AGREED BY:
For WCO: For Snickelways:
Signature: Signature:
------------------------ -----------------------
Name: John R. Daniel II Name: Paul Cimino
Title: Executive Vice President Title: Chief Executive Officer
Date: October 12, 1999 Date: October 14, 1999
20
<PAGE> 21
EXHIBIT C
CHANGE ORDER
SUBMITTED BY:
-----------------------
DATE:
-------------------------------
PLEASE IDENTIFY THE PORTION(S) OF THE INTERACTIVE CONTENT TO BE MODIFIED:
- --------------------------------------------------------------------------------
IF POSSIBLE, PLEASE EXPLAIN THE PROPOSED MODIFICATIONS IN DETAIL:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
RECEIVED BY:
------------------------
DATE:
-------------------------------
MODIFICATION REQUEST #:
--------------------
THIS MODIFICATION WILL IMPACT THE FOLLOWING:
[ ] Media [ ] Software [ ] Budget [ ] Schedule
PLEASE DESCRIBE THE IMPACT OF THIS CHANGE IN SPECIFIC TERMS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
THE ABOVE MODIFICATION, AND ITS IMPACT ON THE PROJECT, IS AGREED TO AND ACCEPTED
BY:
FOR CLIENT: FOR SNICKELWAYS:
Signature: Signature:
---------------------------- --------------------------
Name: Name:
--------------------------------- -------------------------------
Title: Title:
-------------------------------- ------------------------------
Date: Date:
--------------------------------- -------------------------------
21
<PAGE> 22
EXHIBIT D
SI RATE CARD
<TABLE>
<S> <C> <C>
BUSINESS Partner $350
Relationship Manager $175
Business Analyst $150
PROJECT Director of Production $225
Senior Project Manager $200
Project Manager $150
Service Manager $140
QA Manager $140
QA Analyst $125
Production Assistant $75
CREATIVE Chief Creative Officer $250
Art Director $200
Graphics Designer $175
Animation Artist $175
Graphics Production $110
ANCILLARY Video Producer $225
Audio Designer $175
Writer $145
TECHNICAL Chief Technical Officer $350
Technical Director $300
Programmer Analyst $210
Programmer $175
SiteBuilder $125
Systems Engineer $225
Systems Administrator $125
Network Engineer $225
</TABLE>
22
<PAGE> 23
EXHIBIT E
WEB SITES
Web sites that are engaged in top-to-bottom vertical trade communities within
the floral, fish and fresh produce industries (the "Industries"), which shall
not include (a) Web sites or businesses engaged in select discrete and isolated
segments of such vertical trade communities within the Industries, which sites
or businesses operate on a single level of the distribution chain (by way of
example, and without limitation, Monarch Foods) or (b) any businesses in the
Industries not engaged in vertical trade (by way of example, and without
limitation, netgrocer.com). In no event shall SI provide web site development
services to the floral Industry wire services (by way of example, FTD, American
Floral Services, and Teleflora), or to any third party which is a customer of
Client's prior to SI's providing services to the third party.
23
<PAGE> 24
EXHIBIT F
CUSTOM SOFTWARE
AFS Internet/Extranet - virtually all Custom Software with the following
exceptions: licensed photographic images purchased on WCO's behalf, which may
not be transferable.
FloraMall - Virtually all Custom Software.
FloraShops - Virtually all Custom Software with the exceptions licensed
photographic images purchased on WCO's behalf, which may not be transferable.
24
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 18th day of October by and between WORLD COMMERCE ONLINE, INC, a Nevada
corporation (the "Company"), and ROBERT H. SHAW (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business;
WHEREAS, the Executive is currently employed as the Chief Executive
Officer and President of the Company;
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor;
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company;
and
WHEREAS, the Executive is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company on the
terms and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment
under this Agreement, the Executive shall serve as the Chief Executive Officer
and President of the Company, shall diligently perform all services as may be
assigned to him by the Board (provided that, such services shall not materially
differ from the services currently provided by the Executive), and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. The Executive shall devote his full time and attention to the
business and affairs of the Company, render such services to the best of his
ability, and use his best efforts to promote the interests of the Company. It
shall not be a violation of this Agreement for the Executive to: (i) serve on
corporate, civic or charitable boards or committees; (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions; or (iii)
manage
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<PAGE> 2
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities to the Company in
accordance with this Agreement.
2. TERM.
2.1 Initial Term. The initial term of employment under
this Agreement, and the employment of the Executive hereunder, shall commence on
October 18, 1999 (the "Commencement Date") and shall expire on October 18, 2003,
(the "Expiration Date") unless sooner terminated in accordance with Section 5
hereof.
2.2 Term of Employment. The period between the
Commencement Date and the Expiration Date, during which the Executive shall be
employed by the Company pursuant to the terms of this Agreement, is sometimes
referred to in this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base
salary at the annual rate of Two Hundred Twenty Five Thousand ($225,000) Dollars
(the "Base Salary") during the Term of Employment, with such Base Salary payable
in installments consistent with the Company's normal payroll schedule, subject
to applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive such bonuses, if
any, as the Board may in its sole and absolute discretion determine.
(b) Any bonuses paid pursuant to this Section
3.2 are sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of
proper substantiation by the Executive, and subject to such rules and guidelines
as the Company may from time to time adopt, the Company shall reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive
during the Term of Employment in the course of and pursuant to the business of
the Company. The Executive shall account to the Company in writing for all
expenses for which reimbursement is sought and shall supply to the Company
copies of all relevant invoices, receipts or other evidence reasonably requested
by the Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall use reasonable efforts to seek waivers of waiting periods, if any,
applicable to any of the above described benefits
-2-
<PAGE> 3
4.3 Working Facilities. During the Term of Employment,
the Company shall furnish the Executive with an office, secretarial help and
such other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the
Company shall provide the Executive with a non-accountable automobile allowance
of Six Hundred Dollars ($600) per month, which amount is intended to: (a)
compensate the Executive for wear and tear; and (b) reimburse the Executive for
all costs of gasoline, oil, repairs, maintenance, insurance and other expenses
incurred by the Executive by reason of the use of the Executive's automobile for
Company business from time to time.
4.5 Stock Options. Upon the Commencement Date, the
Executive shall be granted an option (the "Stock Option") to purchase Four
Hundred Thirty Six Thousand Eight Hundred (436,800) shares of common stock of
the Company ("Common Stock") pursuant to (and therefore subject to all terms and
conditions of) the Company's 1999 Stock Option Plan as amended, and any
successor plan thereto (the "Stock Option Plan"), as established by the Company,
and all rules or regulations of the Securities and Exchange Commission
applicable to stock option plans then in effect.
4.6 Other Benefits. The Executive shall be entitled to
four (4) weeks of vacation each calendar year during the Term of Employment, to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for which he was hired, which, if curable, is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same; (b) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (c) commission of any
crime which involves moral turpitude; or (d) gross negligence in connection with
the performance of the Executive's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Executive of written
notice of same. Any termination for Cause shall be made in writing to the
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. The Executive shall have the
right to address the Board regarding the acts set forth in the notice of
termination. Upon any termination pursuant to this Section 5.1, the Company
shall pay to the Executive his Base Salary to the date of termination. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.2 Disability. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Term of
Employment, if the Executive shall become entitled to benefits
-3-
<PAGE> 4
under the Company's disability plan or program as then in effect, or, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any 12-month period. The Company shall have sole discretion
based upon competent medical advice to determine whether the Executive continues
to be disabled. Upon any termination pursuant to this Section 5.2, the Company
shall: (a) pay to the Executive any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) pay to the Executive a
severance payment equal to six (6) months of the Executive's Base Salary at the
time of the termination of the Executive's employment with the Company. Any
payments made to the Executive pursuant to subsection 5.2 (b) above shall be
reduced by that amount of compensation or monetary benefit received by the
Executive from any third party from the time of the termination of the
Executive's employment with the Company until six (6) months thereafter. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.3 Death. Upon the death of the Executive during the
Term of Employment with the Company, the Company shall pay to the estate of the
deceased Executive any unpaid Base Salary through the Executive's date of death.
The Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.4 Termination Without Cause. The Company shall at all
times have the right, upon written notice to the Executive, to terminate the
Term of Employment. Upon any termination of the Executive's employment by the
Company (that is not a termination under any of Sections 5.1, 5.2, or 5.3), the
Company shall pay to the Executive: (a) any unpaid Base Salary through the
effective date of termination specified in such notice; and (b) an amount equal
to the Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses. As a condition to receipt of the
Termination Payment: (x) concurrent with the receipt of the first monthly
payment of the Termination Payment, the Executive shall deliver to the Company a
general release in form acceptable to the Board releasing the Company from any
and all rights, claims, demands, judgments, obligations, liabilities and
damages, whether accrued or unaccrued, asserted or unasserted, and whether known
or unknown, relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement without cause,
except payment of the Termination Payment; and (y) the Executive shall notify
the Company if he receives any compensation or other monetary benefit from a
third party during the time period the Executive receives the Termination
Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the
right, upon sixty (60) days written notice to the Company, to terminate the Term
of Employment.
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<PAGE> 5
(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good
Reason" shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; or (iii) the Company's requiring the Executive to be based at
any office or location outside of Florida, except for travel reasonably required
in the performance of the Executive's responsibilities.
5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control
(as defined in subsection (b) of this Section 5.6) in the Company shall occur
during the Term of Employment; and (ii) prior to twelve (12) months after the
date of the Change in Control, either (x) the Term of Employment is terminated
by the Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y)
the Executive terminates the Term of Employment for Good Reason pursuant to
Section 5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall
pay to the Executive: (1) any unpaid Base Salary through the effective date of
termination; and (2) the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the
Executive's employment had been terminated by the Company without Cause. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
(b) For purposes of this Agreement, the term
"Change in Control" shall mean:
(i) Approval by the Board, and
shareholders of the Company if required under applicable law, of: (1) a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other
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<PAGE> 6
transaction do not, immediately thereafter, own 50% or more of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction; (2) a
liquidation or dissolution of the Company; or (3) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) Individuals who, as of the
Commencement Date of this Agreement, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the Commencement Date
of this Agreement whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from
the Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest; or (3) any employee benefit plan of the Company or its
Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall
survive the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes
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<PAGE> 7
and/or object codes; and/or any other proprietary, competition sensitive, or
technical information or secrets developed with or without the help of the
Executive.
6.2 Nondisclosure. The Executive shall not, during the
term of his employment, or at any time thereafter, either directly or
indirectly, communicate, publish, disclose, divulge, or use, or authorize anyone
else to communicate, publish, disclose, divulge, or use, for the benefit of
himself or any other person, persons, partnership, association, corporation, or
other entity, any Confidential Information which may be communicated to the
Executive or of which the Executive may be apprised by virtue of his employment
with the Company. Any and all information, knowledge, know-how, and techniques
which the Company designates as confidential shall be deemed confidential for
purposes of this Agreement, except information which the Executive can
demonstrate came to his attention prior to disclosure thereof by the Company; or
which, at or after the time of disclosure by the Company to the Executive,
lawfully had become a part of the public domain through lawful publication or
communication by others.
6.3 Non-competition. The Executive covenants that, except
as otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of more than ten percent of any class of
capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The
Executive specifically acknowledges that he will have access to Confidential
Information, including, without limitation, prospective and existing customers
or customer lists of the Company. The Executive covenants and agrees that during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months, commencing upon the expiration or termination of the Executive's
relationship with the Company, except as otherwise approved in writing by the
Company, the Executive shall not, either directly or indirectly, for himself, or
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
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(b) Employ or seek to employ any person who is
at that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive
agree that the Confidential Information set forth in Section 6.1 and the
substantial relationships with the Company's specific prospective and existing
customers and vendors: (i) are valuable, special, and a unique asset of the
Company; (ii) have provided and will hereafter provide the Company with a
substantial competitive advantage in the operation of its business; and (iii)
are a legitimate business interest of the Company. The Company and the Executive
also agree that the existence of these legitimate business interests justifies
the need for the restrictive covenants set forth in this Article 2, and the
restrictive covenants are reasonably necessary to protect the Company's
legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Seller.
6.7 Continuity of Restrictions. If the Executive shall
violate any of the terms or covenants contained herein, and if any court action
is instituted by the Company to prevent or enjoin such violation, then the
period of time during which the terms or covenants of this Agreement shall
apply, as provided in this Agreement, shall be lengthened by a period of time
equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not the Company had knowledge
of the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference
material, sketches, drawings, memoranda, files, documents, specifications and
any records in any way relating to any of the
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Confidential Information or to the Company's business, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall remain the
exclusive property of the Company and shall not be removed from the premises of
the Company under any circumstances whatsoever without the prior written consent
of the Company. Upon the request of the Company, or absent such request, upon
the termination of the Executive's employment with the Company for any reason,
the Executive shall immediately return the Company all such property, materials
and any and all copies thereof in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this
Article 6, the term "Company" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.
6.10 Survival. The provisions of this Article 6 shall
survive the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company
hereby acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or indirectly, by the Executive as
a result of such breach, including, but not limited to, true and correct
financial records, or other data detailing the financial benefit the Executive
received or derived, directly or indirectly, from any and all violative acts or
activities, and the Executive thereafter shall be required to pay to the
Company, as damages, cash amounts equal to any and all gross revenues received
or derived by the Executive, directly or indirectly, from any and all violative
acts or activities. The parties hereby agree that the foregoing constitutes a
fair and reasonable estimate of the actual damages that might be suffered by
reason of any breach of any of the covenants contained in Article 6 of this
Agreement by the Executive, and the parties hereby agree to such liquidated
damages in lieu of any and all other measures of damages that might be asserted
in respect of any subject breach.
7.2 Injunction. The Executive agrees that a violation or
a breach of the terms, covenants, or provisions contained in this Agreement
would cause irreparable injury to the Company, and that the remedy at law for
any violation or breach would be inadequate and would be difficult to ascertain,
and therefore, in the event of the violation or breach, or threatened violation
or breach of any such terms, covenants, or provisions contained in this
Agreement, the Company shall have the independent right to enjoin the Executive
from any threatened or actual activities in violation thereof. The Executive
hereby consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
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8. ASSIGNMENT. The Executive shall not have the right to assign
or delegate his rights or obligations hereunder, or any portion thereof, to any
other person. This Agreement, and the Company's rights and obligations
hereunder, shall inure to the benefit of and be binding upon the Company's
successors and assigns.
9. INDEPENDENT COVENANTS. The parties agree that each of the
covenants and provisions contained in this Agreement shall be deemed severable
and construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision
in this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising
out of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
12. GOVERNING LAW. The validity, interpretation and enforcement of
this Agreement shall be governed by and construed in accordance with the local
laws of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS
AGREEMENT, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the
entire and complete understanding and agreement concerning and in reference to
the employment arrangement between the parties hereto. The parties hereto agree
that no prior statements, representations, promises, agreements, instructions,
or understandings, written or oral, pertaining to this Agreement, other than
those specifically set forth and stated herein, shall be of any force or effect.
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16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and
shall not be construed to have been modified, amended, rescinded, canceled, or
waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
17. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered by courier, sent
by registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity
to consult with counsel of their choice and make comments concerning the
Agreement. No legal or other presumption against the party drafting this
Agreement concerning its construction, interpretation or otherwise accrue to the
benefit of any party to this Agreement and each party expressly waives the right
to assert such a presumption in any proceedings or disputes connected with,
arising out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the Company, the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and assigns, any
rights or remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ J. Keith Money
--------------------------
J. Keith Money
Executive Vice President
EXECUTIVE:
/s/ Robert H. Shaw
--------------------------
Robert H. Shaw
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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 18th day of October by and between WORLD COMMERCE ONLINE, INC., a Nevada
corporation (the "Company"), and MARK E. PATTEN (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business; and
WHEREAS, the Board of Directors of the Company (the "Board") believes
that the attraction and retention of key employees such as the Executive is
essential to the growth and success of the Company; and
WHEREAS, the Board desires to employ the Executive as the Chief
Financial Officer and Executive Vice President of the Company; and
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's attention and dedication to the Company; and
WHEREAS, the Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company on the
terms and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment
under this Agreement, the Executive shall serve as the Chief Financial Officer
and Executive Vice President of the Company, shall diligently perform all
services as may be assigned to him by the Board (provided that, such services
shall not materially differ from the services currently provided by the
Executive), and shall exercise such power and authority as may from time to time
be delegated to him by the Board. The Executive shall devote his full time and
attention to the business and affairs of the Company, render such services to
the best of his ability, and use his best efforts to promote the interests of
the Company. It shall not be a violation of this Agreement for the Executive to:
(i) serve on corporate, civic or charitable boards or committees; (ii) deliver
lectures, fulfill speaking engagements or teach at educational institutions; or
(iii) manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's responsibilities
to the Company in accordance with this Agreement.
<PAGE> 2
2. TERM.
2.1 Initial Term. The initial term of employment under
this Agreement, and the employment of the Executive hereunder, shall commence on
October 18, 1999 (the "Commencement Date") and shall expire on October 18, 2003,
(the "Expiration Date") unless sooner terminated in accordance with Section 5
hereof.
2.2 Term of Employment. The period between the
Commencement Date and the Expiration Date, during which the Executive shall be
employed by the Company pursuant to the terms of this Agreement, is sometimes
referred to in this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base
salary at the annual rate of One Hundred Eighty Thousand ($180,000) Dollars (the
"Base Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive such bonuses, if
any, as the Board may in its sole and absolute discretion determine.
(b) Any bonuses paid pursuant to this Section
3.2 are sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of
proper substantiation by the Executive, and subject to such rules and guidelines
as the Company may from time to time adopt, the Company shall reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive
during the Term of Employment in the course of and pursuant to the business of
the Company. The Executive shall account to the Company in writing for all
expenses for which reimbursement is sought and shall supply to the Company
copies of all relevant invoices, receipts or other evidence reasonably requested
by the Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall reimburse the Executive for any deductible and/or co-insurance
payments he may incur under any major medical benefit plan providing coverage
pursuant to this Section 4.2; provided such payments are incurred and required
as a result of his continued use of the current pediatric physician for his
current child or any future children. The Company shall use
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reasonable efforts to seek waivers of waiting periods, if any, applicable to any
of the above described benefits.
4.3 Working Facilities. During the Term of Employment,
the Company shall furnish the Executive with an office, secretarial help and
such other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the
Company shall provide the Executive with a non-accountable automobile allowance
of Six Hundred Dollars ($600) per month, which amount is intended to: (a)
compensate the Executive for wear and tear; and (b) reimburse the Executive for
all costs of gasoline, oil, repairs, maintenance, insurance and other expenses
incurred by the Executive by reason of the use of the Executive's automobile for
Company business from time to time.
4.5 Stock Options. Upon the Commencement Date, the
Executive shall be granted an option (the "Stock Option") to purchase Two
Hundred Thousand (200,000) shares of common stock of the Company ("Common
Stock") pursuant to (and therefore subject to all terms and conditions of) the
Company's 1999 Stock Option Plan as amended, and any successor plan thereto (the
"Stock Option Plan"), as established by the Company, and all rules or
regulations of the Securities and Exchange Commission applicable to stock option
plans then in effect.
4.6 Stock Grant. Upon the Commencement Date, the
Executive shall be granted Twenty Five Thousand (25,000) shares of Common Stock
("Granted Shares") having a value of Four Dollars ($4.00) per share (the "Share
Price"). The Executive shall also receive up to Twenty Five Thousand Dollars
($25,000) cash, plus a loan from the Company in an amount up to approximately
Fifteen Thousand Dollars ($25,000) at the Prime Rate of interest payable upon
termination of the Executive's Term of Employment, to reimburse the Executive
for any federal tax liability he may incur as a result of his receiving the
Granted Shares and any benefits under this Section 4.6. If the Term of
Employment is terminated by the Company for Cause (as defined in Section 5.1),
or the Executive terminates the Term of Employment for other than Good Reason
(as defined in Section 5.5(d)), the Executive shall be obligated to sell, and
the Company shall be obligated to purchase, the Granted Shares for the Share
Price.
4.7 Other Benefits. The Executive shall be entitled to
four (4) weeks of vacation each calendar year during the Term of Employment, to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for
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which he was hired, which, if curable, is not cured within fifteen (15) days
after receipt by the Executive of written notice of same; (b) commission of any
act which involves fraud, embezzlement, misappropriation of funds, or breach of
fiduciary duty in connection with the performance of his duties as an employee
of the Company; (c) commission of any crime which involves moral turpitude; or
(d) gross negligence in connection with the performance of the Executive's
duties hereunder, which, if curable, is not cured within fifteen (15) days after
written receipt by the Executive of written notice of same. Any termination for
Cause shall be made in writing to the Executive, which notice shall set forth in
detail all acts or omissions upon which the Company is relying for such
termination. The Executive shall have the right to address the Board regarding
the acts set forth in the notice of termination. Upon any termination pursuant
to this Section 5.1, the Company shall pay to the Executive his Base Salary to
the date of termination. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses.
5.2 Disability. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Term of
Employment, if the Executive shall become entitled to benefits under the
Company's disability plan or program as then in effect, or, if the Executive
shall as the result of mental or physical incapacity, illness or disability,
become unable to perform his obligations hereunder for a period of 120
consecutive days or for an aggregate of 180 days, whether or not consecutive, in
any 12-month period. The Company shall have sole discretion based upon competent
medical advice to determine whether the Executive continues to be disabled. Upon
any termination pursuant to this Section 5.2, the Company shall: (a) pay to the
Executive any unpaid Base Salary through the effective date of termination
specified in such notice; and (b) pay to the Executive a severance payment equal
to six (6) months of the Executive's Base Salary at the time of the termination
of the Executive's employment with the Company. Any payments made to the
Executive pursuant to subsection 5.2 (b) above shall be reduced by that amount
of compensation or monetary benefit received by the Executive from any third
party from the time of the termination of the Executive's employment with the
Company until six (6) months thereafter. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
5.3 Death. Upon the death of the Executive during the
Term of Employment with the Company, the Company shall pay to the estate of the
deceased Executive any unpaid Base Salary through the Executive's date of death.
The Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.4 Termination Without Cause. The Company shall at all
times have the right, upon written notice to the Executive, to terminate the
Term of Employment. Upon any termination of the Executive's employment by the
Company (that is not a termination under any of Sections 5.1, 5.2, or 5.3), the
Company shall pay to the Executive: (a) any unpaid Base Salary through the
effective date of termination specified in such notice; and (b) an amount equal
to the Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further
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<PAGE> 5
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses. As a condition
to receipt of the Termination Payment: (x) concurrent with the receipt of the
first monthly payment of the Termination Payment, the Executive shall deliver to
the Company a general release in form acceptable to the Board releasing the
Company from any and all rights, claims, demands, judgments, obligations,
liabilities and damages, whether accrued or unaccrued, asserted or unasserted,
and whether known or unknown, relating to the Company which ever existed, then
existed, or may thereafter exist, by reason of the termination of this Agreement
without cause, except payment of the Termination Payment; and (y) the Executive
shall notify the Company if he receives any compensation or other monetary
benefit from a third party during the time period the Executive receives the
Termination Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the
right, upon sixty (60) days written notice to the Company, to terminate the Term
of Employment.
(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good
Reason" shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; or (iii) the Company's requiring the Executive to be based at
any office or location outside of Florida, except for travel reasonably required
in the performance of the Executive's responsibilities.
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5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control
(as defined in subsection (b) of this Section 5.6) in the Company shall occur
during the Term of Employment; and (ii) prior to twelve (12) months after the
date of the Change in Control, either (x) the Term of Employment is terminated
by the Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y)
the Executive terminates the Term of Employment for Good Reason pursuant to
Section 5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall
pay to the Executive: (1) any unpaid Base Salary through the effective date of
termination; and (2) the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the
Executive's employment had been terminated by the Company without Cause. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
(b) For purposes of this Agreement, the term
"Change in Control" shall mean:
(i) Approval by the Board, and
shareholders of the Company if required under applicable law, of: (1) a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own 50% or
more of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction; (2) a liquidation or dissolution of the Company; or (3) the sale of
all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned);
(ii) Individuals who, as of the
Commencement Date of this Agreement, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the Commencement Date
of this Agreement whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from
the Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of
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Rule 13d-3 promulgated under the Securities Exchange Act) of a Controlling
Interest; or (3) any employee benefit plan of the Company or its Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall
survive the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes and/or object codes; and/or any other proprietary, competition
sensitive, or technical information or secrets developed with or without the
help of the Executive.
6.2 Nondisclosure. The Executive shall not, during the
term of his employment, or at any time thereafter, either directly or
indirectly, communicate, publish, disclose, divulge, or use, or authorize anyone
else to communicate, publish, disclose, divulge, or use, for the benefit of
himself or any other person, persons, partnership, association, corporation, or
other entity, any Confidential Information which may be communicated to the
Executive or of which the Executive may be apprised by virtue of his employment
with the Company. Any and all information, knowledge, know-how, and techniques
which the Company designates as confidential shall be deemed confidential for
purposes of this Agreement, except information which the Executive can
demonstrate came to his attention prior to disclosure thereof by the Company; or
which, at or after the time of disclosure by the Company to the Executive,
lawfully had become a part of the public domain through lawful publication or
communication by others.
6.3 Non-competition. The Executive covenants that, except
as otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance
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(financial, managerial, consulting or otherwise) to or cooperate with, any such
business enterprise; provided, however, that such provision shall not apply to
the Executive's ownership of Common Stock of the Company or the acquisition by
the Executive, solely as an investment, of securities of any issuer that is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and that are listed or admitted for trading on any United States
national securities exchange or that are quoted on the National Association of
Securities Dealers Automated Quotations System, or any similar system or
automated dissemination of quotations of securities prices in common use, so
long as the Executive does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control of more
than ten percent of any class of capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The
Executive specifically acknowledges that he will have access to Confidential
Information, including, without limitation, prospective and existing customers
or customer lists of the Company. The Executive covenants and agrees that during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months, commencing upon the expiration or termination of the Executive's
relationship with the Company, except as otherwise approved in writing by the
Company, the Executive shall not, either directly or indirectly, for himself, or
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
(b) Employ or seek to employ any person who is
at that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive
agree that the Confidential Information set forth in Section 6.1 and the
substantial relationships with the Company's specific prospective and existing
customers and vendors: (i) are valuable, special, and a unique asset of the
Company; (ii) have provided and will hereafter provide the Company with a
substantial competitive advantage in the operation of its business; and (iii)
are a legitimate business interest of the Company. The Company and the Executive
also agree that the existence of these legitimate business interests justifies
the need for the restrictive covenants set forth in this Article 2, and the
restrictive covenants are reasonably necessary to protect the Company's
legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use
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<PAGE> 9
such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Seller.
6.7 Continuity of Restrictions. If the Executive shall
violate any of the terms or covenants contained herein, and if any court action
is instituted by the Company to prevent or enjoin such violation, then the
period of time during which the terms or covenants of this Agreement shall
apply, as provided in this Agreement, shall be lengthened by a period of time
equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not the Company had knowledge
of the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference
material, sketches, drawings, memoranda, files, documents, specifications and
any records in any way relating to any of the Confidential Information or to the
Company's business, whether prepared by the Executive or otherwise coming into
the Executive's possession, shall remain the exclusive property of the Company
and shall not be removed from the premises of the Company under any
circumstances whatsoever without the prior written consent of the Company. Upon
the request of the Company, or absent such request, upon the termination of the
Executive's employment with the Company for any reason, the Executive shall
immediately return the Company all such property, materials and any and all
copies thereof in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this
Article 6, the term "Company" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.
6.10 Survival. The provisions of this Article 6 shall
survive the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company
hereby acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or indirectly, by the Executive as
a
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<PAGE> 10
result of such breach, including, but not limited to, true and correct financial
records, or other data detailing the financial benefit the Executive received or
derived, directly or indirectly, from any and all violative acts or activities,
and the Executive thereafter shall be required to pay to the Company, as
damages, cash amounts equal to any and all gross revenues received or derived by
the Executive, directly or indirectly, from any and all violative acts or
activities. The parties hereby agree that the foregoing constitutes a fair and
reasonable estimate of the actual damages that might be suffered by reason of
any breach of any of the covenants contained in Article 6 of this Agreement by
the Executive, and the parties hereby agree to such liquidated damages in lieu
of any and all other measures of damages that might be asserted in respect of
any subject breach.
7.2 Injunction. The Executive agrees that a violation or
a breach of the terms, covenants, or provisions contained in this Agreement
would cause irreparable injury to the Company, and that the remedy at law for
any violation or breach would be inadequate and would be difficult to ascertain,
and therefore, in the event of the violation or breach, or threatened violation
or breach of any such terms, covenants, or provisions contained in this
Agreement, the Company shall have the independent right to enjoin the Executive
from any threatened or actual activities in violation thereof. The Executive
hereby consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
8. ASSIGNMENT. The Executive shall not have the right to assign
or delegate his rights or obligations hereunder, or any portion thereof, to any
other person. This Agreement, and the Company's rights and obligations
hereunder, shall inure to the benefit of and be binding upon the Company's
successors and assigns.
9. INDEPENDENT COVENANTS. The parties agree that each of the
covenants and provisions contained in this Agreement shall be deemed severable
and construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision
in this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising
out of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
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12. GOVERNING LAW. The validity, interpretation and enforcement of
this Agreement shall be governed by and construed in accordance with the local
laws of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS
AGREEMENT, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the
entire and complete understanding and agreement concerning and in reference to
the employment arrangement between the parties hereto. The parties hereto agree
that no prior statements, representations, promises, agreements, instructions,
or understandings, written or oral, pertaining to this Agreement, other than
those specifically set forth and stated herein, shall be of any force or effect.
16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and
shall not be construed to have been modified, amended, rescinded, canceled, or
waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
17. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered by courier, sent
by registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity
to consult with counsel of their choice and make comments concerning the
Agreement. No legal or other presumption against the party drafting this
Agreement concerning its construction, interpretation or otherwise accrue to the
benefit
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<PAGE> 12
of any party to this Agreement and each party expressly waives the right
to assert such a presumption in any proceedings or disputes connected with,
arising out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the Company, the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and assigns, any
rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Employment Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ Robert H. Shaw
-----------------------------------------
Robert H. Shaw
Chief Executive Officer/ President
EXECUTIVE:
/s/ Mark E. Patten
--------------------------------------------
Mark E. Patten
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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 18th day of October by and between WORLD COMMERCE ONLINE, INC, a Nevada
corporation (the "Company"), and J. KEITH MONEY (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business;
WHEREAS, the Executive is currently employed as the Executive Vice
President, Chief Marketing Officer of the Company;
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor;
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company;
and
WHEREAS, the Executive is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company on the
terms and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment
under this Agreement, the Executive shall serve as the Executive Vice President,
Chief Marketing Officer of the Company, shall diligently perform all services as
may be assigned to him by the Board (provided that, such services shall not
materially differ from the services currently provided by the Executive), and
shall exercise such power and authority as may from time to time be delegated to
him by the Board. The Executive shall devote his full time and attention to the
business and affairs of the Company, render such services to the best of his
ability, and use his best efforts to promote the interests of the Company. It
shall not be a violation of this Agreement for the Executive to: (i) serve on
corporate, civic or charitable boards or committees; (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions; or (iii)
<PAGE> 2
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities to the
Company in accordance with this Agreement.
2. TERM.
2.1 Initial Term. The initial term of employment under
this Agreement, and the employment of the Executive hereunder, shall commence on
October 18, 1999 (the "Commencement Date") and shall expire on October 18, 2003,
(the "Expiration Date") unless sooner terminated in accordance with Section 5
hereof.
2.2 Term of Employment. The period between the
Commencement Date and the Expiration Date, during which the Executive shall be
employed by the Company pursuant to the terms of this Agreement, is sometimes
referred to in this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base
salary at the annual rate of One Hundred Eighty Thousand ($180,000) Dollars (the
"Base Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive such bonuses, if
any, as the Board may in its sole and absolute discretion determine.
(b) Any bonuses paid pursuant to this Section
3.2 are sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of
proper substantiation by the Executive, and subject to such rules and guidelines
as the Company may from time to time adopt, the Company shall reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive
during the Term of Employment in the course of and pursuant to the business of
the Company. The Executive shall account to the Company in writing for all
expenses for which reimbursement is sought and shall supply to the Company
copies of all relevant invoices, receipts or other evidence reasonably requested
by the Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall use reasonable efforts to seek waivers of waiting periods, if any,
applicable to any of the above described benefits
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4.3 Working Facilities. During the Term of Employment,
the Company shall furnish the Executive with an office, secretarial help and
such other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the
Company shall provide the Executive with a non-accountable automobile allowance
of Six Hundred Dollars ($600) per month, which amount is intended to: (a)
compensate the Executive for wear and tear; and (b) reimburse the Executive for
all costs of gasoline, oil, repairs, maintenance, insurance and other expenses
incurred by the Executive by reason of the use of the Executive's automobile for
Company business from time to time.
4.5 Stock Options. Upon the Commencement Date, the
Executive shall be granted an option (the "Stock Option") to purchase Three
Hundred Thousand (300,000) shares of common stock of the Company ("Common
Stock") pursuant to (and therefore subject to all terms and conditions of) the
Company's 1999 Stock Option Plan as amended, and any successor plan thereto (the
"Stock Option Plan"), as established by the Company, and all rules or
regulations of the Securities and Exchange Commission applicable to stock option
plans then in effect.
4.6 Other Benefits. The Executive shall be entitled to
four (4) weeks of vacation each calendar year during the Term of Employment, to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for which he was hired, which, if curable, is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same; (b) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (c) commission of any
crime which involves moral turpitude; or (d) gross negligence in connection with
the performance of the Executive's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Executive of written
notice of same. Any termination for Cause shall be made in writing to the
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. The Executive shall have the
right to address the Board regarding the acts set forth in the notice of
termination. Upon any termination pursuant to this Section 5.1, the Company
shall pay to the Executive his Base Salary to the date of termination. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.2 Disability. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Term of
Employment, if the Executive shall become entitled to benefits
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under the Company's disability plan or program as then in effect, or, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any 12-month period. The Company shall have sole discretion
based upon competent medical advice to determine whether the Executive continues
to be disabled. Upon any termination pursuant to this Section 5.2, the Company
shall: (a) pay to the Executive any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) pay to the Executive a
severance payment equal to six (6) months of the Executive's Base Salary at the
time of the termination of the Executive's employment with the Company. Any
payments made to the Executive pursuant to subsection 5.2 (b) above shall be
reduced by that amount of compensation or monetary benefit received by the
Executive from any third party from the time of the termination of the
Executive's employment with the Company until six (6) months thereafter. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.3 Death. Upon the death of the Executive during the
Term of Employment with the Company, the Company shall pay to the estate of the
deceased Executive any unpaid Base Salary through the Executive's date of death.
The Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.4 Termination Without Cause. The Company shall at all
times have the right, upon written notice to the Executive, to terminate the
Term of Employment. Upon any termination of the Executive's employment by the
Company (that is not a termination under any of Sections 5.1, 5.2, or 5.3), the
Company shall pay to the Executive: (a) any unpaid Base Salary through the
effective date of termination specified in such notice; and (b) an amount equal
to the Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses. As a condition to receipt of the
Termination Payment: (x) concurrent with the receipt of the first monthly
payment of the Termination Payment, the Executive shall deliver to the Company a
general release in form acceptable to the Board releasing the Company from any
and all rights, claims, demands, judgments, obligations, liabilities and
damages, whether accrued or unaccrued, asserted or unasserted, and whether known
or unknown, relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement without cause,
except payment of the Termination Payment; and (y) the Executive shall notify
the Company if he receives any compensation or other monetary benefit from a
third party during the time period the Executive receives the Termination
Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the
right, upon sixty (60) days written notice to the Company, to terminate the Term
of Employment.
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(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good
Reason" shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; or (iii) the Company's requiring the Executive to be based at
any office or location outside of Florida, except for travel reasonably required
in the performance of the Executive's responsibilities.
5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control
(as defined in subsection (b) of this Section 5.6) in the Company shall occur
during the Term of Employment; and (ii) prior to twelve (12) months after the
date of the Change in Control, either (x) the Term of Employment is terminated
by the Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y)
the Executive terminates the Term of Employment for Good Reason pursuant to
Section 5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall
pay to the Executive: (1) any unpaid Base Salary through the effective date of
termination; and (2) the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the
Executive's employment had been terminated by the Company without Cause. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
(b) For purposes of this Agreement, the term
"Change in Control" shall mean:
(i) Approval by the Board, and
shareholders of the Company if required under applicable law, of: (1) a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other
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transaction do not, immediately thereafter, own 50% or more of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction; (2) a
liquidation or dissolution of the Company; or (3) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) Individuals who, as of the
Commencement Date of this Agreement, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the Commencement Date
of this Agreement whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from
the Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest; or (3) any employee benefit plan of the Company or its
Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall
survive the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes
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and/or object codes; and/or any other proprietary, competition sensitive, or
technical information or secrets developed with or without the help of the
Executive.
6.2 Nondisclosure. The Executive shall not, during the
term of his employment, or at any time thereafter, either directly or
indirectly, communicate, publish, disclose, divulge, or use, or authorize anyone
else to communicate, publish, disclose, divulge, or use, for the benefit of
himself or any other person, persons, partnership, association, corporation, or
other entity, any Confidential Information which may be communicated to the
Executive or of which the Executive may be apprised by virtue of his employment
with the Company. Any and all information, knowledge, know-how, and techniques
which the Company designates as confidential shall be deemed confidential for
purposes of this Agreement, except information which the Executive can
demonstrate came to his attention prior to disclosure thereof by the Company; or
which, at or after the time of disclosure by the Company to the Executive,
lawfully had become a part of the public domain through lawful publication or
communication by others.
6.3 Non-competition. The Executive covenants that, except
as otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of more than ten percent of any class of
capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The
Executive specifically acknowledges that he will have access to Confidential
Information, including, without limitation, prospective and existing customers
or customer lists of the Company. The Executive covenants and agrees that during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months, commencing upon the expiration or termination of the Executive's
relationship with the Company, except as otherwise approved in writing by the
Company, the Executive shall not, either directly or indirectly, for himself, or
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
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(b) Employ or seek to employ any person who is
at that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive
agree that the Confidential Information set forth in Section 6.1 and the
substantial relationships with the Company's specific prospective and existing
customers and vendors: (i) are valuable, special, and a unique asset of the
Company; (ii) have provided and will hereafter provide the Company with a
substantial competitive advantage in the operation of its business; and (iii)
are a legitimate business interest of the Company. The Company and the Executive
also agree that the existence of these legitimate business interests justifies
the need for the restrictive covenants set forth in this Article 2, and the
restrictive covenants are reasonably necessary to protect the Company's
legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Seller.
6.7 Continuity of Restrictions. If the Executive shall
violate any of the terms or covenants contained herein, and if any court action
is instituted by the Company to prevent or enjoin such violation, then the
period of time during which the terms or covenants of this Agreement shall
apply, as provided in this Agreement, shall be lengthened by a period of time
equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not the Company had knowledge
of the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference
material, sketches, drawings, memoranda, files, documents, specifications and
any records in any way relating to any of the
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Confidential Information or to the Company's business, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall remain the
exclusive property of the Company and shall not be removed from the premises of
the Company under any circumstances whatsoever without the prior written consent
of the Company. Upon the request of the Company, or absent such request, upon
the termination of the Executive's employment with the Company for any reason,
the Executive shall immediately return the Company all such property, materials
and any and all copies thereof in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this
Article 6, the term "Company" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.
6.10 Survival. The provisions of this Article 6 shall
survive the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company hereby
acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or\ indirectly, by the Executive
as a result of such breach, including, but not limited to, true and correct
financial records, or other data detailing the financial benefit the Executive
received or derived, directly or indirectly, from any and all violative acts or
activities, and the Executive thereafter shall be required to pay to the
Company, as damages, cash amounts equal to any and all gross revenues received
or derived by the Executive, directly or indirectly, from any and all violative
acts or activities. The parties hereby agree that the foregoing constitutes a
fair and reasonable estimate of the actual damages that might be suffered by
reason of any breach of any of the covenants contained in Article 6 of this
Agreement by the Executive, and the parties hereby agree to such liquidated
damages in lieu of any and all other measures of damages that might be asserted
in respect of any subject breach.
7.2 Injunction. The Executive agrees that a violation or
a breach of the terms, covenants, or provisions contained in this Agreement
would cause irreparable injury to the Company, and that the remedy at law for
any violation or breach would be inadequate and would be difficult to ascertain,
and therefore, in the event of the violation or breach, or threatened violation
or breach of any such terms, covenants, or provisions contained in this
Agreement, the Company shall have the independent right to enjoin the Executive
from any threatened or actual activities in violation thereof. The Executive
hereby consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
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8. ASSIGNMENT. Neither party shall have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person.
9. INDEPENDENT COVENANTS. The parties agree that each of the
covenants and provisions contained in this Agreement shall be deemed severable
and construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision
in this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising
out of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
12. GOVERNING LAW. The validity, interpretation and enforcement of
this Agreement shall be governed by and construed in accordance with the local
laws of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS
AGREEMENT, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the
entire and complete understanding and agreement concerning and in reference to
the employment arrangement between the parties hereto. The parties hereto agree
that no prior statements, representations, promises, agreements, instructions,
or understandings, written or oral, pertaining to this Agreement, other than
those specifically set forth and stated herein, shall be of any force or effect.
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16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and
shall not be construed to have been modified, amended, rescinded, canceled, or
waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
17. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered by courier, sent
by registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity
to consult with counsel of their choice and make comments concerning the
Agreement. No legal or other presumption against the party drafting this
Agreement concerning its construction, interpretation or otherwise accrue to the
benefit of any party to this Agreement and each party expressly waives the right
to assert such a presumption in any proceedings or disputes connected with,
arising out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the Company, the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and assigns, any
rights or remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ Robert H. Shaw
--------------------------------------
Robert H. Shaw
Chief Executive Officer / President
EXECUTIVE:
/s/ J. Keith Money
-----------------------------------------
J. Keith Money
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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 18th day of October by and between WORLD COMMERCE ONLINE, INC, a Nevada
corporation (the "Company"), and HENRY R. WINOGROND (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business;
WHEREAS, the Executive is currently employed as the Executive Vice
President of Business Development of the Company;
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor;
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company;
and
WHEREAS, the Executive is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company on the
terms and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment
under this Agreement, the Executive shall serve as the Executive Vice President
of Business Development of the Company, shall diligently perform all services as
may be assigned to him by the Board (provided that, such services shall not
materially differ from the services currently provided by the Executive), and
shall exercise such power and authority as may from time to time be delegated to
him by the Board. The Executive shall devote his full time and attention to the
business and affairs of the Company, render such services to the best of his
ability, and use his best efforts to promote the interests of the Company. It
shall not be a violation of this Agreement for the Executive to: (i) serve on
corporate, civic or charitable boards or committees; (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions; or (iii)
<PAGE> 2
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities to the
Company in accordance with this Agreement.
2. TERM.
2.1 Initial Term. The initial term of employment under
this Agreement, and the employment of the Executive hereunder, shall commence on
October 18, 1999 (the "Commencement Date") and shall expire on October 18, 2003,
(the "Expiration Date") unless sooner terminated in accordance with Section 5
hereof.
2.2 Term of Employment. The period between the Commencement
Date and the Expiration Date, during which the Executive shall be employed by
the Company pursuant to the terms of this Agreement, is sometimes referred to in
this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base
salary at the annual rate of One Hundred Eighty Thousand ($180,000) Dollars (the
"Base Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive such bonuses, if
any, as the Board may in its sole and absolute discretion determine.
(b) Any bonuses paid pursuant to this Section
3.2 are sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of
proper substantiation by the Executive, and subject to such rules and guidelines
as the Company may from time to time adopt, the Company shall reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive
during the Term of Employment in the course of and pursuant to the business of
the Company. The Executive shall account to the Company in writing for all
expenses for which reimbursement is sought and shall supply to the Company
copies of all relevant invoices, receipts or other evidence reasonably requested
by the Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall use reasonable efforts to seek waivers of waiting periods, if any,
applicable to any of the above described benefits
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4.3 Working Facilities. During the Term of Employment,
the Company shall furnish the Executive with an office, secretarial help and
such other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the
Company shall provide the Executive with a non-accountable automobile allowance
of Six Hundred Dollars ($600) per month, which amount is intended to: (a)
compensate the Executive for wear and tear; and (b) reimburse the Executive for
all costs of gasoline, oil, repairs, maintenance, insurance and other expenses
incurred by the Executive by reason of the use of the Executive's automobile for
Company business from time to time.
4.5 Stock Options. Upon the Commencement Date, the
Executive shall be granted an option (the "Stock Option") to purchase Two
Hundred Fifty Thousand (250,000) shares of common stock of the Company ("Common
Stock") pursuant to (and therefore subject to all terms and conditions of) the
Company's 1999 Stock Option Plan as amended, and any successor plan thereto (the
"Stock Option Plan"), as established by the Company, and all rules or
regulations of the Securities and Exchange Commission applicable to stock option
plans then in effect.
4.6 Other Benefits. The Executive shall be entitled to
four (4) weeks of vacation each calendar year during the Term of Employment, to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for which he was hired, which, if curable, is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same; (b) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (c) commission of any
crime which involves moral turpitude; or (d) gross negligence in connection with
the performance of the Executive's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Executive of written
notice of same. Any termination for Cause shall be made in writing to the
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. The Executive shall have the
right to address the Board regarding the acts set forth in the notice of
termination. Upon any termination pursuant to this Section 5.1, the Company
shall pay to the Executive his Base Salary to the date of termination. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.2 Disability. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Term of
Employment, if the Executive shall become entitled to benefits
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under the Company's disability plan or program as then in effect, or, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any 12-month period. The Company shall have sole discretion
based upon competent medical advice to determine whether the Executive continues
to be disabled. Upon any termination pursuant to this Section 5.2, the Company
shall: (a) pay to the Executive any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) pay to the Executive a
severance payment equal to six (6) months of the Executive's Base Salary at the
time of the termination of the Executive's employment with the Company. Any
payments made to the Executive pursuant to subsection 5.2 (b) above shall be
reduced by that amount of compensation or monetary benefit received by the
Executive from any third party from the time of the termination of the
Executive's employment with the Company until six (6) months thereafter. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.3 Death. Upon the death of the Executive during the
Term of Employment with the Company, the Company shall pay to the estate of the
deceased Executive any unpaid Base Salary through the Executive's date of death.
The Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.4 Termination Without Cause. The Company shall at all
times have the right, upon written notice to the Executive, to terminate the
Term of Employment. Upon any termination of the Executive's employment by the
Company (that is not a termination under any of Sections 5.1, 5.2, or 5.3), the
Company shall pay to the Executive: (a) any unpaid Base Salary through the
effective date of termination specified in such notice; and (b) an amount equal
to the Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses. As a condition to receipt of the
Termination Payment: (x) concurrent with the receipt of the first monthly
payment of the Termination Payment, the Executive shall deliver to the Company a
general release in form acceptable to the Board releasing the Company from any
and all rights, claims, demands, judgments, obligations, liabilities and
damages, whether accrued or unaccrued, asserted or unasserted, and whether known
or unknown, relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement without cause,
except payment of the Termination Payment; and (y) the Executive shall notify
the Company if he receives any compensation or other monetary benefit from a
third party during the time period the Executive receives the Termination
Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the
right, upon sixty (60) days written notice to the Company, to terminate the Term
of Employment.
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(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good
Reason" shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; or (iii) the Company's requiring the Executive to be based at
any office or location outside of Florida, except for travel reasonably required
in the performance of the Executive's responsibilities.
5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control
(as defined in subsection (b) of this Section 5.6) in the Company shall occur
during the Term of Employment; and (ii) prior to twelve (12) months after the
date of the Change in Control, either (x) the Term of Employment is terminated
by the Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y)
the Executive terminates the Term of Employment for Good Reason pursuant to
Section 5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall
pay to the Executive: (1) any unpaid Base Salary through the effective date of
termination; and (2) the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the
Executive's employment had been terminated by the Company without Cause. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
(b) For purposes of this Agreement, the term
"Change in Control" shall mean:
(i) Approval by the Board, and
shareholders of the Company if required under applicable law, of: (1) a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other
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transaction do not, immediately thereafter, own 50% or more of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction; (2) a
liquidation or dissolution of the Company; or (3) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) Individuals who, as of the
Commencement Date of this Agreement, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the Commencement Date
of this Agreement whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from
the Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest; or (3) any employee benefit plan of the Company or its
Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall
survive the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes
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and/or object codes; and/or any other proprietary, competition sensitive, or
technical information or secrets developed with or without the help of the
Executive.
6.2 Nondisclosure. The Executive shall not, during the
term of his employment, or at any time thereafter, either directly or
indirectly, communicate, publish, disclose, divulge, or use, or authorize anyone
else to communicate, publish, disclose, divulge, or use, for the benefit of
himself or any other person, persons, partnership, association, corporation, or
other entity, any Confidential Information which may be communicated to the
Executive or of which the Executive may be apprised by virtue of his employment
with the Company. Any and all information, knowledge, know-how, and techniques
which the Company designates as confidential shall be deemed confidential for
purposes of this Agreement, except information which the Executive can
demonstrate came to his attention prior to disclosure thereof by the Company; or
which, at or after the time of disclosure by the Company to the Executive,
lawfully had become a part of the public domain through lawful publication or
communication by others.
6.3 Non-competition. The Executive covenants that, except
as otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of more than ten percent of any class of
capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The
Executive specifically acknowledges that he will have access to Confidential
Information, including, without limitation, prospective and existing customers
or customer lists of the Company. The Executive covenants and agrees that during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months, commencing upon the expiration or termination of the Executive's
relationship with the Company, except as otherwise approved in writing by the
Company, the Executive shall not, either directly or indirectly, for himself, or
through, on behalf of, or in conjunction with any person, persons, partnership,
association, corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
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(b) Employ or seek to employ any person who is
at that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive
agree that the Confidential Information set forth in Section 6.1 and the
substantial relationships with the Company's specific prospective and existing
customers and vendors: (i) are valuable, special, and a unique asset of the
Company; (ii) have provided and will hereafter provide the Company with a
substantial competitive advantage in the operation of its business; and (iii)
are a legitimate business interest of the Company. The Company and the Executive
also agree that the existence of these legitimate business interests justifies
the need for the restrictive covenants set forth in this Article 2, and the
restrictive covenants are reasonably necessary to protect the Company's
legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Seller.
6.7 Continuity of Restrictions. If the Executive shall
violate any of the terms or covenants contained herein, and if any court action
is instituted by the Company to prevent or enjoin such violation, then the
period of time during which the terms or covenants of this Agreement shall
apply, as provided in this Agreement, shall be lengthened by a period of time
equal to the period between the date of the initial breach of the terms or
covenants contained in this Agreement, whether or not the Company had knowledge
of the breach, and the date on which the decree of the court disposing of the
issues upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference
material, sketches, drawings, memoranda, files, documents, specifications and
any records in any way relating to any of the
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Confidential Information or to the Company's business, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall remain the
exclusive property of the Company and shall not be removed from the premises of
the Company under any circumstances whatsoever without the prior written consent
of the Company. Upon the request of the Company, or absent such request, upon
the termination of the Executive's employment with the Company for any reason,
the Executive shall immediately return the Company all such property, materials
and any and all copies thereof in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this
Article 6, the term "Company" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.
6.10 Survival. The provisions of this Article 6 shall
survive the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company
hereby acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or indirectly, by the Executive as
a result of such breach, including, but not limited to, true and correct
financial records, or other data detailing the financial benefit the Executive
received or derived, directly or indirectly, from any and all violative acts or
activities, and the Executive thereafter shall be required to pay to the
Company, as damages, cash amounts equal to any and all gross revenues received
or derived by the Executive, directly or indirectly, from any and all violative
acts or activities. The parties hereby agree that the foregoing constitutes a
fair and reasonable estimate of the actual damages that might be suffered by
reason of any breach of any of the covenants contained in Article 6 of this
Agreement by the Executive, and the parties hereby agree to such liquidated
damages in lieu of any and all other measures of damages that might be asserted
in respect of any subject breach.
7.2 Injunction. The Executive agrees that a violation or
a breach of the terms, covenants, or provisions contained in this Agreement
would cause irreparable injury to the Company, and that the remedy at law for
any violation or breach would be inadequate and would be difficult to ascertain,
and therefore, in the event of the violation or breach, or threatened violation
or breach of any such terms, covenants, or provisions contained in this
Agreement, the Company shall have the independent right to enjoin the Executive
from any threatened or actual activities in violation thereof. The Executive
hereby consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
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8. ASSIGNMENT. Neither party shall have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person.
9. INDEPENDENT COVENANTS. The parties agree that each of the
covenants and provisions contained in this Agreement shall be deemed severable
and construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision
in this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising
out of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
12. GOVERNING LAW. The validity, interpretation and enforcement of
this Agreement shall be governed by and construed in accordance with the local
laws of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS
AGREEMENT, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the
entire and complete understanding and agreement concerning and in reference to
the employment arrangement between the parties hereto. The parties hereto agree
that no prior statements, representations, promises, agreements, instructions,
or understandings, written or oral, pertaining to this Agreement, other than
those specifically set forth and stated herein, shall be of any force or effect.
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16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and
shall not be construed to have been modified, amended, rescinded, canceled, or
waived, in whole or in part, except if done so in writing and executed by the
parties hereto.
17. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered by courier, sent
by registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity
to consult with counsel of their choice and make comments concerning the
Agreement. No legal or other presumption against the party drafting this
Agreement concerning its construction, interpretation or otherwise accrue to the
benefit of any party to this Agreement and each party expressly waives the right
to assert such a presumption in any proceedings or disputes connected with,
arising out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the Company, the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and assigns, any
rights or remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ Robert H. Shaw
--------------------------------------
Robert H. Shaw
Chief Executive Officer / President
EXECUTIVE:
/s/ Henry R. Winogrond
-----------------------------------------
Henry R. Winogrond
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Exhibit 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 18th day of October by and between WORLD COMMERCE ONLINE, INC, a Nevada
corporation (the "Company"), and JOHN R. DANIEL II (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business;
WHEREAS, the Executive is currently employed as the Executive Vice
President of Operations of the Company;
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor;
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company;
and
WHEREAS, the Executive is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to employ
the Executive and the Executive hereby agrees to serve the Company on the terms
and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment under
this Agreement, the Executive shall serve as the Executive Vice President of
Operations of the Company, shall diligently perform all services as may be
assigned to him by the Board (provided that, such services shall not materially
differ from the services currently provided by the Executive), and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. The Executive shall devote his full time and attention to the
business and affairs of the Company, render such services to the best of his
ability, and use his best efforts to promote the interests of the Company. It
shall not be a violation of this Agreement for the Executive to: (i) serve on
corporate, civic or charitable boards or committees; (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions; or (iii)
manage
<PAGE> 2
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities to the Company in
accordance with this Agreement.
2. TERM.
2.1 Initial Term. The initial term of employment under this
Agreement, and the employment of the Executive hereunder, shall commence on
October 18, 1999 (the "Commencement Date") and shall expire on October 18, 2003,
(the "Expiration Date") unless sooner terminated in accordance with Section 5
hereof.
2.2 Term of Employment. The period between the Commencement
Date and the Expiration Date, during which the Executive shall be employed by
the Company pursuant to the terms of this Agreement, is sometimes referred to in
this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base salary at
the annual rate of One Hundred Eighty Thousand ($180,000) Dollars (the "Base
Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive such bonuses, if any,
as the Board may in its sole and absolute discretion determine.
(b) Any bonuses paid pursuant to this Section 3.2 are
sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt, the Company shall reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive during
the Term of Employment in the course of and pursuant to the business of the
Company. The Executive shall account to the Company in writing for all expenses
for which reimbursement is sought and shall supply to the Company copies of all
relevant invoices, receipts or other evidence reasonably requested by the
Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall use reasonable efforts to seek waivers of waiting periods, if any,
applicable to any of the above described benefits
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4.3 Working Facilities. During the Term of Employment, the
Company shall furnish the Executive with an office, secretarial help and such
other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the Company
shall provide the Executive with a non-accountable automobile allowance of Six
Hundred Dollars ($600) per month, which amount is intended to: (a) compensate
the Executive for wear and tear; and (b) reimburse the Executive for all costs
of gasoline, oil, repairs, maintenance, insurance and other expenses incurred by
the Executive by reason of the use of the Executive's automobile for Company
business from time to time.
4.5 Stock Options. Upon the Commencement Date, the Executive
shall be granted an option (the "Stock Option") to purchase Two Hundred Fifty
Thousand (250,000) shares of common stock of the Company ("Common Stock")
pursuant to (and therefore subject to all terms and conditions of) the Company's
1999 Stock Option Plan as amended, and any successor plan thereto (the "Stock
Option Plan"), as established by the Company, and all rules or regulations of
the Securities and Exchange Commission applicable to stock option plans then in
effect.
4.6 Other Benefits. The Executive shall be entitled to four
(4) weeks of vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for which he was hired, which, if curable, is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same; (b) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (c) commission of any
crime which involves moral turpitude; or (d) gross negligence in connection with
the performance of the Executive's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Executive of written
notice of same. Any termination for Cause shall be made in writing to the
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. The Executive shall have the
right to address the Board regarding the acts set forth in the notice of
termination. Upon any termination pursuant to this Section 5.1, the Company
shall pay to the Executive his Base Salary to the date of termination. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.2 Disability. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Term of Employment, if
the Executive shall become entitled to benefits
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under the Company's disability plan or program as then in effect, or, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any 12-month period. The Company shall have sole discretion
based upon competent medical advice to determine whether the Executive continues
to be disabled. Upon any termination pursuant to this Section 5.2, the Company
shall: (a) pay to the Executive any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) pay to the Executive a
severance payment equal to six (6) months of the Executive's Base Salary at the
time of the termination of the Executive's employment with the Company. Any
payments made to the Executive pursuant to subsection 5.2 (b) above shall be
reduced by that amount of compensation or monetary benefit received by the
Executive from any third party from the time of the termination of the
Executive's employment with the Company until six (6) months thereafter. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.3 Death. Upon the death of the Executive during the Term of
Employment with the Company, the Company shall pay to the estate of the deceased
Executive any unpaid Base Salary through the Executive's date of death. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.4 Termination Without Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment. Upon any termination of the Executive's employment by the Company
(that is not a termination under any of Sections 5.1, 5.2, or 5.3), the Company
shall pay to the Executive: (a) any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) an amount equal to the
Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses. As a condition to receipt of the
Termination Payment: (x) concurrent with the receipt of the first monthly
payment of the Termination Payment, the Executive shall deliver to the Company a
general release in form acceptable to the Board releasing the Company from any
and all rights, claims, demands, judgments, obligations, liabilities and
damages, whether accrued or unaccrued, asserted or unasserted, and whether known
or unknown, relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement without cause,
except payment of the Termination Payment; and (y) the Executive shall notify
the Company if he receives any compensation or other monetary benefit from a
third party during the time period the Executive receives the Termination
Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the right,
upon sixty (60) days written notice to the Company, to terminate the Term of
Employment.
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(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good Reason"
shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; or (iii) the Company's requiring the Executive to be based at
any office or location outside of Florida, except for travel reasonably required
in the performance of the Executive's responsibilities.
5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control (as
defined in subsection (b) of this Section 5.6) in the Company shall occur during
the Term of Employment; and (ii) prior to twelve (12) months after the date of
the Change in Control, either (x) the Term of Employment is terminated by the
Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y) the
Executive terminates the Term of Employment for Good Reason pursuant to Section
5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall pay to the
Executive: (1) any unpaid Base Salary through the effective date of termination;
and (2) the same amount of monies that would have been payable by the Company to
the Executive under Section 5.4 of this Agreement if the Executive's employment
had been terminated by the Company without Cause. The Company shall have no
further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(b) For purposes of this Agreement, the term "Change
in Control" shall mean:
(i) Approval by the Board, and shareholders
of the Company if required under applicable law, of: (1) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other
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<PAGE> 6
transaction do not, immediately thereafter, own 50% or more of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction; (2) a
liquidation or dissolution of the Company; or (3) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) Individuals who, as of the Commencement
Date of this Agreement, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the Commencement Date of this Agreement
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from the
Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest; or (3) any employee benefit plan of the Company or its
Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall survive
the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes
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and/or object codes; and/or any other proprietary, competition sensitive, or
technical information or secrets developed with or without the help of the
Executive.
6.2 Nondisclosure. The Executive shall not, during the term of
his employment, or at any time thereafter, either directly or indirectly,
communicate, publish, disclose, divulge, or use, or authorize anyone else to
communicate, publish, disclose, divulge, or use, for the benefit of himself or
any other person, persons, partnership, association, corporation, or other
entity, any Confidential Information which may be communicated to the Executive
or of which the Executive may be apprised by virtue of his employment with the
Company. Any and all information, knowledge, know-how, and techniques which the
Company designates as confidential shall be deemed confidential for purposes of
this Agreement, except information which the Executive can demonstrate came to
his attention prior to disclosure thereof by the Company; or which, at or after
the time of disclosure by the Company to the Executive, lawfully had become a
part of the public domain through lawful publication or communication by others.
6.3 Non-competition. The Executive covenants that, except as
otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of more than ten percent of any class of
capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The Executive
specifically acknowledges that he will have access to Confidential Information,
including, without limitation, prospective and existing customers or customer
lists of the Company. The Executive covenants and agrees that during the term of
this Agreement, and for a continuous uninterrupted period of twelve (12) months,
commencing upon the expiration or termination of the Executive's relationship
with the Company, except as otherwise approved in writing by the Company, the
Executive shall not, either directly or indirectly, for himself, or through, on
behalf of, or in conjunction with any person, persons, partnership, association,
corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
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(b) Employ or seek to employ any person who is at
that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive agree
that the Confidential Information set forth in Section 6.1 and the substantial
relationships with the Company's specific prospective and existing customers and
vendors: (i) are valuable, special, and a unique asset of the Company; (ii) have
provided and will hereafter provide the Company with a substantial competitive
advantage in the operation of its business; and (iii) are a legitimate business
interest of the Company. The Company and the Executive also agree that the
existence of these legitimate business interests justifies the need for the
restrictive covenants set forth in this Article 2, and the restrictive covenants
are reasonably necessary to protect the Company's legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Seller.
6.7 Continuity of Restrictions. If the Executive shall violate
any of the terms or covenants contained herein, and if any court action is
instituted by the Company to prevent or enjoin such violation, then the period
of time during which the terms or covenants of this Agreement shall apply, as
provided in this Agreement, shall be lengthened by a period of time equal to the
period between the date of the initial breach of the terms or covenants
contained in this Agreement, whether or not the Company had knowledge of the
breach, and the date on which the decree of the court disposing of the issues
upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference material,
sketches, drawings, memoranda, files, documents, specifications and any records
in any way relating to any of the
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Confidential Information or to the Company's business, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall remain the
exclusive property of the Company and shall not be removed from the premises of
the Company under any circumstances whatsoever without the prior written consent
of the Company. Upon the request of the Company, or absent such request, upon
the termination of the Executive's employment with the Company for any reason,
the Executive shall immediately return the Company all such property, materials
and any and all copies thereof in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this Article
6, the term "Company" also shall include any existing or future subsidiaries of
the Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.
6.10 Survival. The provisions of this Article 6 shall survive
the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company hereby
acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or indirectly, by the Executive as
a result of such breach, including, but not limited to, true and correct
financial records, or other data detailing the financial benefit the Executive
received or derived, directly or indirectly, from any and all violative acts or
activities, and the Executive thereafter shall be required to pay to the
Company, as damages, cash amounts equal to any and all gross revenues received
or derived by the Executive, directly or indirectly, from any and all violative
acts or activities. The parties hereby agree that the foregoing constitutes a
fair and reasonable estimate of the actual damages that might be suffered by
reason of any breach of any of the covenants contained in Article 6 of this
Agreement by the Executive, and the parties hereby agree to such liquidated
damages in lieu of any and all other measures of damages that might be asserted
in respect of any subject breach.
7.2 Injunction. The Executive agrees that a violation or a
breach of the terms, covenants, or provisions contained in this Agreement would
cause irreparable injury to the Company, and that the remedy at law for any
violation or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
the Company shall have the independent right to enjoin the Executive from any
threatened or actual activities in violation thereof. The Executive hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
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8. ASSIGNMENT. Neither party shall have the right to assign or delegate
his rights or obligations hereunder, or any portion thereof, to any other
person.
9. INDEPENDENT COVENANTS. The parties agree that each of the covenants
and provisions contained in this Agreement shall be deemed severable and
construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision in
this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
12. GOVERNING LAW. The validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the local laws
of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO SUBMIT
TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS AGREEMENT,
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES
ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the entire
and complete understanding and agreement concerning and in reference to the
employment arrangement between the parties hereto. The parties hereto agree that
no prior statements, representations, promises, agreements, instructions, or
understandings, written or oral, pertaining to this Agreement, other than those
specifically set forth and stated herein, shall be of any force or effect.
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16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and shall
not be construed to have been modified, amended, rescinded, canceled, or waived,
in whole or in part, except if done so in writing and executed by the parties
hereto.
17. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity to
consult with counsel of their choice and make comments concerning the Agreement.
No legal or other presumption against the party drafting this Agreement
concerning its construction, interpretation or otherwise accrue to the benefit
of any party to this Agreement and each party expressly waives the right to
assert such a presumption in any proceedings or disputes connected with, arising
out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ Robert H. Shaw
-----------------------------------
Robert H. Shaw
Chief Executive Officer / President
EXECUTIVE:
/s/ John R. Daniel II
---------------------------------------
John R. Daniel II
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Exhibit 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 1st day of July, 1999, by and between WORLD COMMERCE ONLINE, INC, a
Delaware corporation (the "Company"), and EUGENIO M. VALDES (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business; and
WHEREAS, the Board of Directors of the Company (the "Board") believes
that the attraction and retention of key employees such as the Executive is
essential to the growth and success of the Company; and
WHEREAS, the Board desires to employ the Executive as a Vice President
of the Company and as the Chief Operating Officer for North and South America of
World Commerce Online - Floraplex, Inc. ("Floraplex"), a wholly-owned subsidiary
of the Company; and
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's attention and dedication to the Company; and
WHEREAS, the Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to employ
the Executive and the Executive hereby agrees to serve the Company on the terms
and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment under
this Agreement, the Executive shall serve as a Vice President of the Company and
the Chief Operating Officer for North and South America of Floraplex, shall
diligently perform all services as may be assigned to him by the Board (provided
that, such services shall not materially differ from the services currently
provided by the Executive), and shall exercise such power and authority as may
from time to time be delegated to him by the Board. The Executive shall
<PAGE> 2
devote his full time and attention to the business and affairs of the Company,
render such services to the best of his ability, and use his best efforts to
promote the interests of the Company. It shall not be a violation of this
Agreement for the Executive to: (i) serve on corporate, civic or charitable
boards or committees; (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions; or (iii) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities to the Company in accordance with this Agreement.
2. TERM.
2.1 Initial Term. The initial term of employment under this
Agreement, and the employment of the Executive hereunder, shall commence on July
1, 1999 (the "Commencement Date") and shall expire on June 30, 2003, (the
"Expiration Date") unless sooner terminated in accordance with Section 5 hereof.
2.2 Term of Employment. The period between the Commencement
Date and the Expiration Date, during which the Executive shall be employed by
the Company pursuant to the terms of this Agreement, is sometimes referred to in
this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base salary at
the annual rate of One Hundred Eighty Thousand ($180,000) Dollars (the "Base
Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually (July 1), for merit increases and may, by action and in the
discretion of the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive bonuses in the total
annual amount of $70,000.00, to be paid equally on a quarterly basis, if the
Executive achieves 100% of his quarterly goals as determined by the Company in
its sole and absolute discretion;
(b) Any bonuses paid pursuant to this Section 3.2 are
sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt, the Company shall reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive during
the Term of Employment in the course of and
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pursuant to the business of the Company. The Executive shall account to the
Company in writing for all expenses for which reimbursement is sought and shall
supply to the Company copies of all relevant invoices, receipts or other
evidence reasonably requested by the Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall reimburse the Executive for any deductible and/or co-insurance
payments he may incur under any major medical benefit plan providing coverage
pursuant to this Section 4.2; provided such payments are incurred and required
as a result of his continued use of the current pediatric physician for his
current child or any future children. The Company shall use reasonable efforts
to seek waivers of waiting periods, if any, applicable to any of the above
described benefits.
4.3 Working Facilities. During the Term of Employment, the
Company shall furnish the Executive with an office, secretarial help and such
other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the Company
shall provide the Executive with a non-accountable automobile allowance of Six
Hundred Dollars ($600) per month, which amount is intended to: (a) compensate
the Executive for wear and tear; and (b) reimburse the Executive for all costs
of gasoline, oil, repairs, maintenance, insurance and other expenses incurred by
the Executive by reason of the use of the Executive's automobile for Company
business from time to time.
4.5 Stock Options. Upon the Commencement Date, the Executive
shall be granted an option (the "Stock Option") to purchase Two Hundred Thousand
(200,000) shares of common stock of the Company ("Common Stock") pursuant to
(and therefore subject to all terms and conditions of) the Company's 1999 Stock
Option Plan as amended, and any successor plan thereto (the "Stock Option
Plan"), as established by the Company, and all rules or regulations of the
Securities and Exchange Commission applicable to stock option plans then in
effect.
4.6 Other Benefits. The Executive shall be entitled to four
(4) weeks of vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
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<PAGE> 4
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for which he was hired, which, if curable, is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same; (b) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (c) commission of any
crime which involves moral turpitude; or (d) gross negligence in connection with
the performance of the Executive's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Executive of written
notice of same. Any termination for Cause shall be made in writing to the
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. The Executive shall have the
right to address the Board regarding the acts set forth in the notice of
termination. Upon any termination pursuant to this Section 5.1, the Company
shall pay to the Executive his Base Salary to the date of termination. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.2 Disability. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Term of Employment, if
the Executive shall become entitled to benefits under the Company's disability
plan or program as then in effect, or, if the Executive shall as the result of
mental or physical incapacity, illness or disability, become unable to perform
his obligations hereunder for a period of 120 consecutive days or for an
aggregate of 180 days, whether or not consecutive, in any 12-month period. The
Company shall have sole discretion based upon competent medical advice to
determine whether the Executive continues to be disabled. Upon any termination
pursuant to this Section 5.2, the Company shall: (a) pay to the Executive any
unpaid Base Salary through the effective date of termination specified in such
notice; and (b) pay to the Executive a severance payment equal to six (6) months
of the Executive's Base Salary at the time of the termination of the Executive's
employment with the Company. Any payments made to the Executive pursuant to
subsection 5.2 (b) above shall be reduced by that amount of compensation or
monetary benefit received by the Executive from any third party from the time of
the termination of the Executive's employment with the Company until six (6)
months thereafter. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses.
5.3 Death. Upon the death of the Executive during the Term of
Employment with the Company, the Company shall pay to the estate of the deceased
Executive any unpaid Base Salary through the Executive's date of death. The
Company shall have no further liability
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under this Agreement other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
Company's policy on reimbursements of business expenses.
5.4 Termination Without Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment. Upon any termination of the Executive's employment by the Company
(that is not a termination under any of Sections 5.1, 5.2, or 5.3), the Company
shall pay to the Executive: (a) any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) an amount equal to the
Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses. As a condition to receipt of the
Termination Payment: (x) concurrent with the receipt of the first monthly
payment of the Termination Payment, the Executive shall deliver to the Company a
general release in form acceptable to the Board releasing the Company from any
and all rights, claims, demands, judgments, obligations, liabilities and
damages, whether accrued or unaccrued, asserted or unasserted, and whether known
or unknown, relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement without cause,
except payment of the Termination Payment; and (y) the Executive shall notify
the Company if he receives any compensation or other monetary benefit from a
third party during the time period the Executive receives the Termination
Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the right,
upon sixty (60) days written notice to the Company, to terminate the Term of
Employment.
(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary (and Bonus due) through the
effective date of termination specified in such notice. The Company shall have
no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for
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reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
(d) For purposes of this Agreement, "Good Reason"
shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary (and Bonus due) in installments consistent with the Company's
normal payroll schedule, subject to applicable withholding and other taxes,
other than an isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive; or (iii) the Company's requiring the Executive
to be based at any office or location outside of Florida, except for travel
reasonably required in the performance of the Executive's responsibilities.
5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control (as
defined in subsection (b) of this Section 5.6) in the Company shall occur during
the Term of Employment; and (ii) prior to twelve (12) months after the date of
the Change in Control, either (x) the Term of Employment is terminated by the
Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y) the
Executive terminates the Term of Employment for Good Reason pursuant to Section
5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall pay to the
Executive: (1) any unpaid Base Salary through the effective date of termination;
and (2) the same amount of monies that would have been payable by the Company to
the Executive under Section 5.4 of this Agreement if the Executive's employment
had been terminated by the Company without Cause. The Company shall have no
further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(b) For purposes of this Agreement, the term "Change
in Control" shall mean:
(i) Approval by the Board, and shareholders
of the Company if required under applicable law, of: (1) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own 50% or
more of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction; (2) a liquidation or dissolution of the Company; or (3) the sale of
all or
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substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) Individuals who, as of the Commencement
Date of this Agreement, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the Commencement Date of this Agreement
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from the
Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest; or (3) any employee benefit plan of the Company or its
Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall survive
the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational,
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sales, promotional, and marketing methods and techniques; computer programs,
including source codes and/or object codes; and/or any other proprietary,
competition sensitive, or technical information or secrets developed with or
without the help of the Executive.
6.2 Nondisclosure. The Executive shall not, during the term of
his employment, or at any time thereafter, either directly or indirectly,
communicate, publish, disclose, divulge, or use, or authorize anyone else to
communicate, publish, disclose, divulge, or use, for the benefit of himself or
any other person, persons, partnership, association, corporation, or other
entity, any Confidential Information which may be communicated to the Executive
or of which the Executive may be apprised by virtue of his employment with the
Company. Any and all information, knowledge, know-how, and techniques which the
Company designates as confidential shall be deemed confidential for purposes of
this Agreement, except information which the Executive can demonstrate came to
his attention prior to disclosure thereof by the Company; or which, at or after
the time of disclosure by the Company to the Executive, lawfully had become a
part of the public domain through lawful publication or communication by others.
6.3 Non-competition. The Executive covenants that, except as
otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of more than ten percent of any class of
capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The Executive
specifically acknowledges that he will have access to Confidential Information,
including, without limitation, prospective and existing customers or customer
lists of the Company. The Executive covenants and agrees that during the term of
this Agreement, and for a continuous uninterrupted period of twelve (12) months,
commencing upon the expiration or termination of the Executive's relationship
with the Company, except as otherwise approved in writing by the Company, the
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Executive shall not, either directly or indirectly, for himself, or through, on
behalf of, or in conjunction with any person, persons, partnership, association,
corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
(b) Employ or seek to employ any person who is at
that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive agree
that the Confidential Information set forth in Section 6.1 and the substantial
relationships with the Company's specific prospective and existing customers and
vendors: (i) are valuable, special, and a unique asset of the Company; (ii) have
provided and will hereafter provide the Company with a substantial competitive
advantage in the operation of its business; and (iii) are a legitimate business
interest of the Company. The Company and the Executive also agree that the
existence of these legitimate business interests justifies the need for the
restrictive covenants set forth in this Article 2, and the restrictive covenants
are reasonably necessary to protect the Company's legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against
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public policy, a lesser time period or geographical area which is determined to
be reasonable, non-arbitrary, and not against public policy may be enforced
against Seller.
6.7 Continuity of Restrictions. If the Executive shall violate
any of the terms or covenants contained herein, and if any court action is
instituted by the Company to prevent or enjoin such violation, then the period
of time during which the terms or covenants of this Agreement shall apply, as
provided in this Agreement, shall be lengthened by a period of time equal to the
period between the date of the initial breach of the terms or covenants
contained in this Agreement, whether or not the Company had knowledge of the
breach, and the date on which the decree of the court disposing of the issues
upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference material,
sketches, drawings, memoranda, files, documents, specifications and any records
in any way relating to any of the Confidential Information or to the Company's
business, whether prepared by the Executive or otherwise coming into the
Executive's possession, shall remain the exclusive property of the Company and
shall not be removed from the premises of the Company under any circumstances
whatsoever without the prior written consent of the Company. Upon the request of
the Company, or absent such request, upon the termination of the Executive's
employment with the Company for any reason, the Executive shall immediately
return the Company all such property, materials and any and all copies thereof
in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this Article
6, the term "Company" also shall include any existing or future subsidiaries of
the Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.
6.10 Survival. The provisions of this Article 6 shall survive
the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company hereby
acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or indirectly, by the Executive as
a result of such breach, including, but not limited to, true and correct
financial records, or other data detailing the financial benefit the Executive
received or derived, directly or indirectly, from any and all violative acts or
activities, and the Executive thereafter shall be required to pay to the
Company, as damages, cash amounts equal to any and all gross revenues received
or derived by the Executive, directly or indirectly, from any
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and all violative acts or activities. The parties hereby agree that the
foregoing constitutes a fair and reasonable estimate of the actual damages that
might be suffered by reason of any breach of any of the covenants contained in
Article 6 of this Agreement by the Executive, and the parties hereby agree to
such liquidated damages in lieu of any and all other measures of damages that
might be asserted in respect of any subject breach.
7.2 Injunction. The Executive agrees that a violation or a
breach of the terms, covenants, or provisions contained in this Agreement would
cause irreparable injury to the Company, and that the remedy at law for any
violation or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
the Company shall have the independent right to enjoin the Executive from any
threatened or actual activities in violation thereof. The Executive hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
8. ASSIGNMENT. The Executive shall not have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person. This Agreement, and the Company's rights and obligations
hereunder, shall inure to the benefit of and be binding upon the Company's
successors and assigns.
9. INDEPENDENT COVENANTS. The parties agree that each of the covenants
and provisions contained in this Agreement shall be deemed severable and
construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision in
this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
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12. GOVERNING LAW. The validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the local laws
of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO SUBMIT
TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS AGREEMENT,
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES
ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the entire
and complete understanding and agreement concerning and in reference to the
employment arrangement between the parties hereto. The parties hereto agree that
no prior statements, representations, promises, agreements, instructions, or
understandings, written or oral, pertaining to this Agreement, other than those
specifically set forth and stated herein, shall be of any force or effect.
16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and shall
not be construed to have been modified, amended, rescinded, canceled, or waived,
in whole or in part, except if done so in writing and executed by the parties
hereto.
17. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
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18. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity to
consult with counsel of their choice and make comments concerning the Agreement.
No legal or other presumption against the party drafting this Agreement
concerning its construction, interpretation or otherwise accrue to the benefit
of any party to this Agreement and each party expressly waives the right to
assert such a presumption in any proceedings or disputes connected with, arising
out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Employment Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Delaware corporation
By: /s/ Robert H. Shaw
-----------------------------------
Robert H. Shaw
Chief Executive Officer/President
EXECUTIVE:
/s/ Eugenio M. Valdes
-----------------------------------
Eugenio M. Valdes
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<PAGE> 1
Exhibit 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
on this 18th day of October by and between WORLD COMMERCE ONLINE, INC, a Nevada
corporation (the "Company"), and JAAP N. KRAS (the "Executive").
R E C I T A L S:
WHEREAS, the Company is engaged in providing seamless and secure
networks on the world wide web to agribusiness organizations and industries to
enable them to do business-to-business and business-to-consumer transactions
worldwide (the "Business"), and has invested substantial time and money to
develop and build substantial relationships with specific prospective or
existing customers and other individuals and businesses with which it does
business;
WHEREAS, the Executive is currently employed as the Executive Vice
President of European, African and Middle Eastern Operations of the Company;
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive has contributed to the growth and success of the Company, and
desires to assure the Company of the Executive's continued employment and to
compensate him therefor;
WHEREAS, the Board has determined that this Agreement will reinforce
and encourage the Executive's continued attention and dedication to the Company;
and
WHEREAS, the Executive is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for the reasons set forth hereinabove, and in
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. EMPLOYMENT.
1.1 Employment and Term. The Company hereby agrees to employ
the Executive and the Executive hereby agrees to serve the Company on the terms
and conditions set forth herein.
1.2 Duties of Executive. During the Term of Employment under
this Agreement, the Executive shall serve as the Executive Vice President of
European, African and Middle Eastern Operations of the Company, shall diligently
perform all services as may be assigned to him by the Board (provided that, such
services shall not materially differ from the services currently provided by the
Executive), and shall exercise such power and authority as may from time to time
be delegated to him by the Board. The Executive shall devote his full time and
attention to the business and affairs of the Company, render such services to
the best of his ability, and use his best efforts to promote the interests of
the Company. It shall not be a violation of this Agreement for the Executive to:
(i) serve on corporate, civic or charitable boards or committees; (ii) deliver
lectures, fulfill speaking engagements or
<PAGE> 2
teach at educational institutions; or (iii) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities to the Company in accordance with this Agreement.
2. TERM.
2.1 Initial Term. The initial term of employment under this
Agreement, and the employment of the Executive hereunder, shall commence on
October 18, 1999 (the "Commencement Date") and shall expire on October 18, 2003,
(the "Expiration Date") unless sooner terminated in accordance with Section 5
hereof.
2.2 Term of Employment. The period between the Commencement
Date and the Expiration Date, during which the Executive shall be employed by
the Company pursuant to the terms of this Agreement, is sometimes referred to in
this Agreement as the "Term of Employment."
3. COMPENSATION.
3.1 Base Salary. The Executive shall receive a base salary at
the annual rate of One Hundred Eighty Thousand ($180,000) Dollars (the "Base
Salary") during the Term of Employment, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be reviewed, at
least annually, for merit increases and may, by action and in the discretion of
the Board, be increased at any time or from time to time.
3.2 Bonuses.
(a) The Executive shall receive such bonuses, if any,
as the Board may in its sole and absolute discretion determine.
(b) Any bonuses paid pursuant to this Section 3.2 are
sometimes hereinafter referred to as "Incentive Compensation."
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 Reimbursement of Expenses. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt, the Company shall reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive during
the Term of Employment in the course of and pursuant to the business of the
Company. The Executive shall account to the Company in writing for all expenses
for which reimbursement is sought and shall supply to the Company copies of all
relevant invoices, receipts or other evidence reasonably requested by the
Company.
4.2 Compensation/Benefit Programs. During the term of
Employment, the Company shall provide coverage for the Executive under: (a)
major medical and dental plans, including coverage for his family; (b)
disability and life insurance plans; and (c) any and all other plans as are
presently and hereinafter offered by the Company to its executives, including
savings, pension, profit-sharing and deferred compensation plans, subject to the
general eligibility and participation provisions set forth in such plans. The
Company shall use reasonable efforts to seek waivers of waiting periods, if any,
applicable to any of the above described benefits.
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4.3 Working Facilities. During the Term of Employment, the
Company shall furnish the Executive with an office, secretarial help and such
other facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 Automobile. During the Term of Employment, the Company
shall provide the Executive with a non-accountable automobile allowance of Six
Hundred Dollars ($600) per month, which amount is intended to: (a) compensate
the Executive for wear and tear; and (b) reimburse the Executive for all costs
of gasoline, oil, repairs, maintenance, insurance and other expenses incurred by
the Executive by reason of the use of the Executive's automobile for Company
business from time to time.
4.5 Stock Options. Upon the Commencement Date, the Executive
shall be granted an option (the "Stock Option") to purchase Two Hundred Fifty
Thousand (250,000) shares of common stock of the Company ("Common Stock")
pursuant to (and therefore subject to all terms and conditions of) the Company's
1999 Stock Option Plan as amended, and any successor plan thereto (the "Stock
Option Plan"), as established by the Company, and all rules or regulations of
the Securities and Exchange Commission applicable to stock option plans then in
effect.
4.6 Other Benefits. The Executive shall be entitled to four
(4) weeks of vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken by the
Executive during any calendar year may not be carried forward into any
succeeding calendar year. The Executive shall receive such additional benefits,
if any, as the Board of the Company shall from time to time determine.
5. TERMINATION.
5.1 Termination for Cause. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause. For purposes of this Agreement, the term "Cause" shall
mean: (a) an action or omission of the Executive which constitutes a material
breach of, or failure or refusal (other than by reason of his disability) to
perform his duties for which he was hired, which, if curable, is not cured
within fifteen (15) days after receipt by the Executive of written notice of
same; (b) commission of any act which involves fraud, embezzlement,
misappropriation of funds, or breach of fiduciary duty in connection with the
performance of his duties as an employee of the Company; (c) commission of any
crime which involves moral turpitude; or (d) gross negligence in connection with
the performance of the Executive's duties hereunder, which, if curable, is not
cured within fifteen (15) days after written receipt by the Executive of written
notice of same. Any termination for Cause shall be made in writing to the
Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. The Executive shall have the
right to address the Board regarding the acts set forth in the notice of
termination. Upon any termination pursuant to this Section 5.1, the Company
shall pay to the Executive his Base Salary to the date of termination. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.2 Disability. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Term of Employment, if
the Executive shall become entitled to benefits
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<PAGE> 4
under the Company's disability plan or program as then in effect, or, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any 12-month period. The Company shall have sole discretion
based upon competent medical advice to determine whether the Executive continues
to be disabled. Upon any termination pursuant to this Section 5.2, the Company
shall: (a) pay to the Executive any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) pay to the Executive a
severance payment equal to six (6) months of the Executive's Base Salary at the
time of the termination of the Executive's employment with the Company. Any
payments made to the Executive pursuant to subsection 5.2 (b) above shall be
reduced by that amount of compensation or monetary benefit received by the
Executive from any third party from the time of the termination of the
Executive's employment with the Company until six (6) months thereafter. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.3 Death. Upon the death of the Executive during the Term of
Employment with the Company, the Company shall pay to the estate of the deceased
Executive any unpaid Base Salary through the Executive's date of death. The
Company shall have no further liability under this Agreement other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the Company's policy on reimbursements of
business expenses.
5.4 Termination Without Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the Term of
Employment. Upon any termination of the Executive's employment by the Company
(that is not a termination under any of Sections 5.1, 5.2, or 5.3), the Company
shall pay to the Executive: (a) any unpaid Base Salary through the effective
date of termination specified in such notice; and (b) an amount equal to the
Base Salary ("Termination Payment") in twelve (12) equal monthly payments
commencing one (1) month after the effective date of termination specified in
the termination notice described above. The amount of the Termination Payment
shall be reduced by that amount of compensation or monetary benefit received by
the Executive from any third party from the time of the termination of the
Executive's employment with the Company until the Termination Payment is paid in
full to the Executive. The Company shall have no further liability under this
Agreement other than for reimbursement for reasonable business expenses incurred
prior to the date of termination, subject, however, to the Company's policy on
reimbursements of business expenses. As a condition to receipt of the
Termination Payment: (x) concurrent with the receipt of the first monthly
payment of the Termination Payment, the Executive shall deliver to the Company a
general release in form acceptable to the Board releasing the Company from any
and all rights, claims, demands, judgments, obligations, liabilities and
damages, whether accrued or unaccrued, asserted or unasserted, and whether known
or unknown, relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement without cause,
except payment of the Termination Payment; and (y) the Executive shall notify
the Company if he receives any compensation or other monetary benefit from a
third party during the time period the Executive receives the Termination
Payment.
5.5 Termination by the Executive.
(a) The Executive shall at all times have the right,
upon sixty (60) days written notice to the Company, to terminate the Term of
Employment.
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(b) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive without Good Reason, the Company
shall pay to the Executive any unpaid Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability under this Agreement other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the Company's policy on reimbursements of business expenses.
(c) Upon termination of the Term of Employment
pursuant to this Section 5.5 by the Executive for Good Reason, the Company shall
pay to the Executive the same amount of monies that would have been payable by
the Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. The Company shall
have no further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(d) For purposes of this Agreement, "Good Reason"
shall mean: (i) the assignment to the Executive of any duties materially
inconsistent with the Executive's current position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to pay
the Base Salary in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; or (iii) the Company's requiring the Executive to be based at
any office or location outside of Florida, except for travel reasonably required
in the performance of the Executive's responsibilities.
5.6 Change in Control of the Company.
(a) In the event that: (i) a Change in Control (as
defined in subsection (b) of this Section 5.6) in the Company shall occur during
the Term of Employment; and (ii) prior to twelve (12) months after the date of
the Change in Control, either (x) the Term of Employment is terminated by the
Company other than pursuant to any of Sections 5.1, 5.2, or 5.3, or (y) the
Executive terminates the Term of Employment for Good Reason pursuant to Section
5.5(c) hereof, as defined in Section 5.5(d) hereof, the Company shall pay to the
Executive: (1) any unpaid Base Salary through the effective date of termination;
and (2) the same amount of monies that would have been payable by the Company to
the Executive under Section 5.4 of this Agreement if the Executive's employment
had been terminated by the Company without Cause. The Company shall have no
further liability under this Agreement other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the Company's policy on reimbursements of business expenses.
(b) For purposes of this Agreement, the term "Change
in Control" shall mean:
(i) Approval by the Board, and shareholders
of the Company if required under applicable law, of: (1) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other
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<PAGE> 6
transaction do not, immediately thereafter, own 50% or more of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction; (2) a
liquidation or dissolution of the Company; or (3) the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned);
(ii) Individuals who, as of the Commencement
Date of this Agreement, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the Commencement Date of this Agreement
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) the acquisition (other than from the
Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of 50% or more of either
the then outstanding shares of the Company's Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter referred to as the ownership
of a "Controlling Interest") excluding, for this purpose, any acquisitions by:
(1) the Company or its Subsidiaries; (2) any person, entity or "group" that as
of the Commencement Date of this Agreement owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of a
Controlling Interest; or (3) any employee benefit plan of the Company or its
Subsidiaries.
5.7 Resignation. Upon any termination of the Term of
Employment pursuant to this Article 5, the Executive shall be deemed to have
resigned as an officer, and if he or she was then serving as a director of the
Company, as a director, and if required by the Board, the Executive hereby
agrees to immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall survive
the termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 Confidential Information. The Executive hereby
acknowledges and agrees that in the course of his employment he will acquire
knowledge and will have access to information, whether in written, typed or
other form, regarding the business operations of the Company. Specifically, the
following types of information are deemed confidential ("Confidential
Information") and shall not be disclosed or used by the Executive except as
required and authorized in furtherance of the Company's business: specific
prospective customers of the Company; specific existing customers of the
Company; other individuals and businesses with whom the Company does business;
proprietary information; trade secrets, as defined in Section 688.002(4),
Florida Statute's; financial or corporate records; operational, sales,
promotional, and marketing methods and techniques; computer programs, including
source codes
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and/or object codes; and/or any other proprietary, competition sensitive, or
technical information or secrets developed with or without the help of the
Executive.
6.2 Nondisclosure. The Executive shall not, during the term of
his employment, or at any time thereafter, either directly or indirectly,
communicate, publish, disclose, divulge, or use, or authorize anyone else to
communicate, publish, disclose, divulge, or use, for the benefit of himself or
any other person, persons, partnership, association, corporation, or other
entity, any Confidential Information which may be communicated to the Executive
or of which the Executive may be apprised by virtue of his employment with the
Company. Any and all information, knowledge, know-how, and techniques which the
Company designates as confidential shall be deemed confidential for purposes of
this Agreement, except information which the Executive can demonstrate came to
his attention prior to disclosure thereof by the Company; or which, at or after
the time of disclosure by the Company to the Executive, lawfully had become a
part of the public domain through lawful publication or communication by others.
6.3 Non-competition. The Executive covenants that, except as
otherwise approved in writing by the Company, the Executive shall not, during
the term of this Agreement, and for a continuous uninterrupted period of twelve
(12) months commencing upon the expiration or termination of the Executive's
employment relationship with the Company, regardless of the cause for
termination, individually, or jointly with others, either directly or
indirectly, for himself, or through, on behalf of, or in conjunction with any
person, persons, partnership, association, corporation, or other entity, own,
maintain, operate, engage in, or have any interest in any business enterprise
which is the same as, similar to or competitive with the Business, regardless of
the geographical location of such other business enterprise, and shall not
directly or indirectly act as an officer, director, employee, partner,
contractor, consultant, advisor, principal, agent, or proprietor, or in any
other capacity for, nor lend any assistance (financial, managerial, consulting
or otherwise) to or cooperate with, any such business enterprise; provided,
however, that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of more than ten percent of any class of
capital stock of such corporation.
6.4 Nonsolicitation of Employees and Clients. The Executive
specifically acknowledges that he will have access to Confidential Information,
including, without limitation, prospective and existing customers or customer
lists of the Company. The Executive covenants and agrees that during the term of
this Agreement, and for a continuous uninterrupted period of twelve (12) months,
commencing upon the expiration or termination of the Executive's relationship
with the Company, except as otherwise approved in writing by the Company, the
Executive shall not, either directly or indirectly, for himself, or through, on
behalf of, or in conjunction with any person, persons, partnership, association,
corporation, or entity:
(a) Divert or attempt to divert or solicit any
prospective or existing customer of the Company to any competitor by direct or
indirect inducement or otherwise; or
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(b) Employ or seek to employ any person who is at
that time employed by the Company, any affiliate of the Company, or otherwise
directly or indirectly induce or solicit such person to leave his or her
employment.
6.5 Reasonably Necessary. The Company and the Executive agree
that the Confidential Information set forth in Section 6.1 and the substantial
relationships with the Company's specific prospective and existing customers and
vendors: (i) are valuable, special, and a unique asset of the Company; (ii) have
provided and will hereafter provide the Company with a substantial competitive
advantage in the operation of its business; and (iii) are a legitimate business
interest of the Company. The Company and the Executive also agree that the
existence of these legitimate business interests justifies the need for the
restrictive covenants set forth in this Article 2, and the restrictive covenants
are reasonably necessary to protect the Company's legitimate business interests.
6.6 Reasonable Restrictions. The Executive agrees and
acknowledges; (a) that the geographical and time limitations contained in this
Agreement are reasonable and properly required for the adequate protection of
the business interests of the Company; and (b) the restrictions contained in
this Article 6 (including without limitation the length of the term of the
provisions of this Article 6) are not overbroad, overlong, or unfair and are not
the result of overreaching, duress or coercion of any kind. The Executive
further acknowledges and confirms that his full, uninhibited and faithful
observance of each of the covenants contained in this Article 6 will not cause
him any undue hardship, financial or otherwise, and that enforcement of each of
the covenants contained herein will not impair his ability to obtain employment
commensurate with his abilities and on terms fully acceptable to him or
otherwise to obtain income required for the comfortable support of him and his
family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Company is such as would cause the Company serious injury or loss if he were to
use such ability and knowledge to the benefit of a competitor or were to compete
with the Company in violation of the terms of this Article 6. It is agreed by
the Executive that if any portion of the restrictions contained in this
Agreement are held to be unreasonable, arbitrary, or against public policy, then
the restriction shall be considered divisible, both as to the time and to the
geographical area, with each month of the specified period being deemed a
separate period of time, and each country or portion thereof of the specified
area being deemed a separate geographical area, so that the lesser period of
time or geographical area shall remain effective, so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree that
in the event any court of competent jurisdiction determines the specified period
or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary, and not
against public policy may be enforced against Seller.
6.7 Continuity of Restrictions. If the Executive shall violate
any of the terms or covenants contained herein, and if any court action is
instituted by the Company to prevent or enjoin such violation, then the period
of time during which the terms or covenants of this Agreement shall apply, as
provided in this Agreement, shall be lengthened by a period of time equal to the
period between the date of the initial breach of the terms or covenants
contained in this Agreement, whether or not the Company had knowledge of the
breach, and the date on which the decree of the court disposing of the issues
upon the merits shall become final and not subject to further appeal.
6.8 Books and Records. All notes, data, reference material,
sketches, drawings, memoranda, files, documents, specifications and any records
in any way relating to any of the
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<PAGE> 9
Confidential Information or to the Company's business, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall remain the
exclusive property of the Company and shall not be removed from the premises of
the Company under any circumstances whatsoever without the prior written consent
of the Company. Upon the request of the Company, or absent such request, upon
the termination of the Executive's employment with the Company for any reason,
the Executive shall immediately return the Company all such property, materials
and any and all copies thereof in the Executive's possession.
6.9 Definition of Company. Solely for purposes of this Article
6, the term "Company" also shall include any existing or future subsidiaries of
the Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.
6.10 Survival. The provisions of this Article 6 shall survive
the termination of this Agreement, as applicable.
7. REMEDIES.
7.1 Liquidated Damages. The Executive and the Company hereby
acknowledge and agree that, in the event of any breach by the Executive,
directly or indirectly, of the foregoing restrictive covenants, it will be
difficult to ascertain the precise amount of damages that may be suffered by the
Company by reason of such breach; and accordingly, the parties hereby agree
that, as liquidated damages (and not as a penalty) in respect of any such
breach, the Executive shall be required to provide an accounting of any and all
benefits received or derived, either directly or indirectly, by the Executive as
a result of such breach, including, but not limited to, true and correct
financial records, or other data detailing the financial benefit the Executive
received or derived, directly or indirectly, from any and all violative acts or
activities, and the Executive thereafter shall be required to pay to the
Company, as damages, cash amounts equal to any and all gross revenues received
or derived by the Executive, directly or indirectly, from any and all violative
acts or activities. The parties hereby agree that the foregoing constitutes a
fair and reasonable estimate of the actual damages that might be suffered by
reason of any breach of any of the covenants contained in Article 6 of this
Agreement by the Executive, and the parties hereby agree to such liquidated
damages in lieu of any and all other measures of damages that might be asserted
in respect of any subject breach.
7.2 Injunction. The Executive agrees that a violation or a
breach of the terms, covenants, or provisions contained in this Agreement would
cause irreparable injury to the Company, and that the remedy at law for any
violation or breach would be inadequate and would be difficult to ascertain, and
therefore, in the event of the violation or breach, or threatened violation or
breach of any such terms, covenants, or provisions contained in this Agreement,
the Company shall have the independent right to enjoin the Executive from any
threatened or actual activities in violation thereof. The Executive hereby
consents and agrees that temporary and permanent injunctive relief may be
granted in any proceedings which might be brought to enforce any such terms,
covenants, or provisions without the necessity of proof of actual damages or the
posting of a bond. In the event the Company does apply for such an injunction,
the Executive shall not raise as a defense thereto that the Company has an
adequate remedy at law.
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<PAGE> 10
8. ASSIGNMENT. Neither party shall have the right to assign or delegate
his rights or obligations hereunder, or any portion thereof, to any other
person.
9. INDEPENDENT COVENANTS. The parties agree that each of the covenants
and provisions contained in this Agreement shall be deemed severable and
construed as independent of any other covenant or provision.
10. SEVERABILITY. If all or any portion of a covenant or provision in
this Agreement is held invalid, unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which the
Company is a party, the remaining covenants and provisions shall remain valid
and enforceable. The Executive expressly agrees to be bound by any lesser
covenant or provision subsumed within the terms of such covenant or provision
that imposes the maximum duty permitted by law, as if the resulting covenant or
provision were separately stated in, and made a part of this Agreement.
11. ATTORNEYS' FEES. In the event of a dispute regarding, arising out
of, or in connection with the breach, enforcement, or interpretation of this
Agreement, including, without limitation, any action seeking declaratory relief,
equitable relief, injunctive relief, or damages, or any litigation or cause of
action, including, without limitation, any appeals, federal bankruptcy
proceedings, receivership or insolvency proceedings, reorganization, or other
proceedings, the prevailing party shall recover all costs and reasonable
attorneys' fees incurred in connection therewith, including without limitation
at the pre-trial, trial and appellate levels, and any costs of collection.
12. GOVERNING LAW. The validity, interpretation and enforcement of this
Agreement shall be governed by and construed in accordance with the local laws
of the State of Florida (without giving effect to its conflicts of laws
provisions), and to the exclusion of the law of any other forum, without regard
to the jurisdiction in which any action or special proceeding may be instituted.
13. EXCLUSIVE JURISDICTION; VENUE. EACH PARTY HERETO AGREES TO SUBMIT
TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN ORANGE COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.
14. WAIVER OF JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THIS AGREEMENT,
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES
ALL RIGHTS TO A TRIAL BY JURY OF ANY ISSUES SO TRIABLE.
15. ENTIRE AGREEMENT. This Agreement contains and represents the entire
and complete understanding and agreement concerning and in reference to the
employment arrangement between the parties hereto. The parties hereto agree that
no prior statements, representations, promises, agreements, instructions, or
understandings, written or oral, pertaining to this Agreement, other than those
specifically set forth and stated herein, shall be of any force or effect.
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<PAGE> 11
16. MODIFICATIONS AND AMENDMENTS. This Agreement may not be, and shall
not be construed to have been modified, amended, rescinded, canceled, or waived,
in whole or in part, except if done so in writing and executed by the parties
hereto.
17. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent: (a) if to the Company, addressed to 9677 Tradeport Drive,
Orlando, Florida 32827, Attention: Chief Executive Officer; and (b) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
18. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
19. CONSTRUCTION. Each party to this Agreement had the opportunity to
consult with counsel of their choice and make comments concerning the Agreement.
No legal or other presumption against the party drafting this Agreement
concerning its construction, interpretation or otherwise accrue to the benefit
of any party to this Agreement and each party expressly waives the right to
assert such a presumption in any proceedings or disputes connected with, arising
out of, or involving this Agreement.
20. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
21. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
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<PAGE> 12
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
COMPANY:
WORLD COMMERCE ONLINE, INC.,
a Nevada corporation
By: /s/ Robert H. Shaw
-----------------------------------
Robert H. Shaw
Chief Executive Officer / President
EXECUTIVE:
/s/ Jaap N. Kras
---------------------------------------
Jaap N. Kras
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<PAGE> 1
Exhibit 10.22
SELLER USER AGREEMENT
World Commerce Online - Floraplex, Inc. ("FLORAPLEX") and Dole Fresh
Flowers, Inc. ("USER") agree to the following terms and conditions for USER's
use of the FLORAPLEX e-commerce online trading system ("System"):
1. FLORAPLEX and USER agree that the terms of this Agreement shall
supercede, modify, and alter the standard, online Terms and Conditions of Use
(see Exhibit "A") applicable to sellers using the System.
2. FLORAPLEX will develop and provide the necessary System functions to
allow USER to upload, edit, and download its products for sale information.
3. FLORAPLEX will develop and provide USER with the System functions to
allow USER to sell its entire bouquet and consumer bunch programs.
4. FLORAPLEX will provide USER with the necessary training and
materials to operate the System.
5. FLORAPLEX will work to provide USER with an analysis to better
understand possible cost savings of using e-commerce vs. USER's traditional
model.
6. FLORAPLEX will develop and provide USER with the System functions to
offer special pricing for specific products to designated customers.
7. USER will commit the following resources:
a. Yvette Speziani, or a designee to be approved by
mutual consent of the parties, to be the FLORAPLEX
Coordinator responsible for all coordination of sales
and marketing activities between FLORAPLEX and USER.
FLORAPLEX will reimburse USER for all of her salary
and she will report to Geno Valdes;
b. Also, USER will appoint Alejandro Bueno, or a
designee to be approved by mutual consent of the
parties, as the Logistics Coordinator to ensure
orders are processed and distributed;
c. FLORAPLEX personnel will have access to Alex Garcia,
Dole Fresh Flowers' CFO, to ensure and coordinate all
financial and technology driven issues; and
d. Each party agrees not to solicit any of the employees
of the other party for the purpose of employing them
in its business or that of its affiliates.
<PAGE> 2
8. FLORAPLEX and USER agree that the term of this Agreement shall be
for a period of two (2) years, but after 120 days from the commencement of this
Agreement, either party may terminate this Agreement upon thirty-days (30) prior
written notice with or without cause. During the term of this Agreement,
FLORAPLEX will be USER's preferred e-commerce solution for the sale of flowers
using the Internet to traditional wholesale florists and mass markets. FLORAPLEX
acknowledges and agrees that nothing contained in this Agreement shall
interfere or otherwise restrain USER with respect to USER's existing e-commerce
business relationships regardless of whether such relationships are evidenced by
a written contract.
9. USER agrees to pay the monthly transaction fees to reflect a sliding
scale as follows:
MONTHLY SALES THRUPUT Transaction Fee
--------------------- ---------------
$0 - $5 million 2.5%
over $5 million 2.0%
10. USER will pay monthly subscription fees of $150.00 per individual
shipping location (e.g., Bogota, Medellin, Quito, and others), and $5.95 per
each additional individual user.
11. FLORAPLEX will provide Web Marketing capabilities to USER to
promote daily product specials and E-brochures at a 15% discount over published
advertising rates.
12. As part of the consideration for this Agreement, Dole Fresh
Flowers, Inc. will be granted warrants from World Commerce Online, Inc. to
purchase up to 1 million shares of WCOL stock at the Current Market Price as set
forth in the Warrant Agreement, a copy of which is attached hereto as Exhibit
"B."
13. FLORAPLEX and USER jointly agree to cooperate in marketing the
System to USER's primary customers as an alternative customer service sales
option.
14. FLORAPLEX and USER will develop a joint press release announcing
this venture.
15. FLORAPLEX and USER operate independent businesses, each acting for
its own individual account and profit and not for any joint business of the
parties. The parties do not intend by the making of this Agreement to form or
operate a partnership or joint venture.
16. This Agreement and the rights of the parties shall be interpreted
in accordance with Florida law. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement. This instrument constitutes all of the
understandings and agreements existing between the parties concerning this
Agreement and the rights, interests, understandings, covenants, and obligations
created by this Agreement. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, the invalidity,
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<PAGE> 3
illegality, or unenforceability shall not affect any other provision, and this
Agreement shall be construed as if it did not contain the invalid, illegal, or
unenforceable provision. Any changes in this Agreement shall be embodied in a
written amendment to this Agreement, signed by both parties, and shall be
effective from the date specified in the amendment.
17. If any controversy shall arise between the parties hereto as to the
application or interpretation of this Agreement, and such controversy cannot be
resolved through the best efforts of the parties, then the parties shall select
a mutually acceptable independent mediator. If mediation efforts do not resolve
the controversy, then either party shall have the right to demand arbitration.
The arbitrator shall be chosen by mutual agreement of the parties. If the
parties are unable to agree upon an arbitrator, then the arbitrator shall be
appointed in accordance with the American Arbitration Association's Rules and
Regulations. The arbitrator's findings of fact, conclusions of law and decision
shall be binding and final upon the parties hereto. Each party shall bear its
own costs, including its own attorneys' fees. The arbitrator's fees and costs
shall be allocated by the arbitrator in accordance with his decision. The relief
sought and which may be awarded by the arbitrator shall not include damages in
the nature of an exemplary or punitive award, and the parties hereby waive any
right to claim the same. Judgment upon the award may be entered in any court of
competent jurisdiction. The terms of this subparagraph shall survive the
termination of this Agreement.
TO THE EXTENT NOT SUPERCEDED, MODIFIED, OR ALTERED BY THE TERMS OF THIS
AGREEMENT, THE STANDARD, ONLINE TERMS AND CONDITIONS OF USE SHALL REMAIN IN FULL
FORCE AND EFFECT.
/s/ Lorenzo De La Torre
------------------------------------------
Lorenzo De La Torre, President
Dole Fresh Flowers, Inc.
/s/ Eugenio M. Valdes
------------------------------------------
Eugenio M. Valdes, Chief Operating Officer
FLORAPLEX
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<PAGE> 1
Exhibit 10.23
MASTER OUTSOURCED SERVICES AGREEMENT
THIS MASTER OUTSOURCED SERVICES AGREEMENT (the "Agreement") is
effective as of the 30th day of December, 1999 (the "Effective Date"), and is by
and between eCredit.com, Inc., a Delaware corporation, having its principal
place of business at 400 Blue Hill Drive, Suite 300, Westwood, MA 02090
("eCredit.com") and World Commerce Online, a Florida corporation, having its
principal place of business at Orlando International Airport, Tradeport Commerce
Center, 9677 Tradeport Drive, Orlando FL 32827 ("Client").
WHEREAS, Client conducts credit evaluations of its prospective
customers and arranges financing for customers; and
WHEREAS, eCredit.com, among other business activities, offers certain
proprietary business process automation services designed to facilitate the
credit evaluation and financing process in an outsourced environment
("Outsourced Services"); and
WHEREAS, Client desires to retain eCredit.com to customize the
Outsourced Services according to protocols provided by Client ("Client's
Business Logic") to process consumer and business credit information provided by
Client or obtained by eCredit.com at the request of Client ("Data").
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
set forth in this Agreement and for other good and valuable consideration, the
receipt and adequacy of which is acknowledged by all parties, the parties hereby
agree as follows:
1. Obligations of eCredit.com. eCredit.com will customize its
Outsourced Services according to Client's Business Logic (as set forth in
Schedule 1 hereto and made a part hereof) and will process Data according to
Client's Business Logic and return the results of such processing ("Processed
Transactions") to Client in an online interactive mode. These Outsourced
Services will be provided to Client on a non-exclusive basis.
2. Payment. Client shall pay to eCredit.com the fees as set forth in
Schedule 2.1 hereto.
3. Term. This Agreement shall continue in effect for an initial term as
set forth in Schedule 3.1 (the "Initial Term") and will automatically renew at
the end of the Initial Term or any extension for additional terms as set forth
in Schedule 3.1 ("Renewal Terms") unless either party tenders written notice of
its intent to terminate within sixty (60) days of the renewal date.
4. Terms and Conditions. The attached Terms and Conditions are
incorporated herein and made a part hereof.
Executed as of the date set forth above, as a document under seal, by
the duly authorized representatives of the parties hereto.
eCredit.com, Inc. World Commerce Online
Name: Kevin M. Higgins Name: Mark E. Patten
Signature: /s/ Kevin M. Higgins Signature: /s/ Mark E. Patten
-------------------------- ----------------------------
Title: VP Channel Sales & Title: Chief Financial Officer
Sales Operations
1
<PAGE> 2
MASTER OUTSOURCED SERVICES AGREEMENT
TERMS AND CONDITIONS
1. Performance of Outsourced Services. eCredit.com will use
commercially reasonable efforts to assure that Outsourced Services are generally
available twenty-four (24) hours per day, seven (7) days per week, according to
the Specifications. Client shall be solely and exclusively responsible for the
provision of Client's Business Logic and Data.
2. Taxes and Charges. Client shall reimburse eCredit.com within ten
(10) days of receipt of eCredit.com's invoice for all taxes or similar
assessments related to this Agreement, other than taxes based on the net income
of eCredit.com.
3. Pass Through Expenses. Subject to written consent, Client will
reimburse eCredit.com for any new or increased fees, or other charges that
increase eCredit.com's costs in performing this Agreement.
4. Termination.
4.1 Either party hereto may terminate this Agreement
immediately should the other party (i) admit in writing its inability to pay its
debts generally as they become due; (ii) make a general assignment for the
benefit of creditors; (iii) institute or consent to bankruptcy proceedings
against it; (iv) be adjudicated as being bankrupt or insolvent; (v) seek or
consent to reorganization under any bankruptcy act; or (vi) have a decree
entered against it by a court of competent jurisdiction appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or in insolvency covering all or
substantially all of such party's property or providing for the liquidation of
such party's property or business affairs.
4.2 Should either party commit a material breach of its
obligations, the other party may terminate this Agreement, by thirty (30) days'
written notice describing the basis for such termination unless prior to
expiration of such period the defaulting party cures such default. Client's
non-payment of any invoice shall constitute a material breach.
4.3 In the event that eCredit.com reasonably believes that
Client's conduct or Client's Data, Business Logic or Products violate applicable
law, injure the reputation of eCredit.com, or pose a threat to eCredit.com's
systems, equipment, processes, Outsourced Services Business or Intellectual
Property (the "Threatening Condition"), eCredit.com may, at its election,
suspend providing the Outsourced Services to Client with one (1) day prior
written notice and at any time thereafter may terminate this Agreement without
notice if the Threatening Condition or payment delinquency remains uncured more
than ten (10) calendar days after said notice.
4.4 Upon termination by either party, eCredit.com shall
discontinue any use of Client's Business Logic and Data which constitute
Intellectual Property of Client within ten (10) business days following the date
of termination. Except as otherwise provided in this Agreement, within ten (10)
business days following the termination of this Agreement, each of the parties
shall return to the other party all materials belonging to the other party that
constitute Confidential Information and/or Intellectual Property.
4.5 The provisions of this Agreement relating to payment of
any fees, charges or other amounts owed, payment of any interest thereon,
intellectual property rights, confidentiality,
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<PAGE> 3
warranties, limitation of liability, compliance with law, and indemnity shall
survive any termination or expiration of this Agreement as well as any other
provisions which expressly provide therefor.
5. Intellectual Property and Confidentiality.
5.1 Intellectual Property Rights.
(a) For purposes of this Agreement, "Intellectual
Property" shall mean (i) copyrights (including, without limitation, the right to
reproduce, distribute copies of, display and perform the copyrighted work and to
prepare derivative works in any format or media), copyright registrations and
applications, patent rights (including, without limitation, registrations and
applications), trade mark and service mark rights (including, without
limitation, registrations and applications), trade names, mask-work rights,
trade secrets, moral rights, algorithms, trade dress, goodwill and other
proprietary rights, and all renewals, divisions, continuations,
continuations-in-part, reissues, additions and extensions thereof, regardless of
whether any of such rights arise under the laws of the United States or any
other state, country or jurisdiction; (ii) intangible legal rights or interests
evidenced by or embodied in any idea, design, concept, process, technology,
invention, discovery, enhancement, improvement or information and data which is
not generally known, (including formulae, procedures, protocols, techniques and
results of experimentation and testing) that is necessary or useful, regardless
of patentability, but including patents, patent applications, trade secrets, and
know-how; (iii) all appurtenances related to, and derivatives of any of the
foregoing; (iv) Client's Business Logic and Data proprietary to Client and any
Confidential Information of Client and (v) the Outsourced Services and any
Confidential Information of eCredit.com.
(b) Except as expressly set forth in this Agreement,
neither party will acquire any right, title, or interest in the other's
Intellectual Property.
5.2 Protection of Confidential Information.
(a) Confidential Information. Each party understands
and acknowledges that any data or information, oral or written, treated as
confidential that relates to the other's research, development or business
activities, including any unannounced products and services, other clients,
suppliers, and service providers, business processes and plans, finances,
internal operations, developments, inventions, processes, plans, financial
information, data, revenue, forecasts, projections, methods of compiling,
manipulating, presenting and disseminating Outsourced Services or information,
access control systems, security codes, and details of systems and applications
which is disclosed or otherwise made available to the other party and the
financial and other contractual terms of this Agreement (collectively,
"Confidential Information"), represent valuable confidential information
entitled to protection as trade secrets. The parties shall keep confidential,
shall not disclose, and shall protect from unauthorized disclosure by their
employees and agents, Confidential Information and all copies or physical
embodiments thereof in any media in its possession, and shall limit access to
Confidential Information to those who require such access in connection with
this Agreement. Each party shall secure and protect the Confidential Information
and any and all copies and other physical embodiments thereof in any media in
its possession in a manner consistent with the steps taken to protect its own
trade secrets and Confidential Information, but not less than a reasonable
degree of care. Each party shall take appropriate action with its employees who
are permitted access to the Confidential Information to satisfy its obligations
hereunder.
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<PAGE> 4
(b) Exceptions. The confidentiality obligations set
forth above shall not prohibit disclosure of (i) information previously known to
the receiving party without reference to Confidential Information, (ii)
information which is or becomes publicly known through no wrongful act of the
receiving party, (iii) information received from a third party under no
confidentiality obligation with respect to the Confidential Information, (iv)
information required to be disclosed under administrative or court order or in
arbitration or litigation arising out of a this Agreement, or (vi) information
concerning the terms of this Agreement in connection with debt and capital
fund-raising of eCredit.com and other transactions to parties under
confidentiality obligations to eCredit.com.
6. Representations, Warranties and Certain Agreements.
6.1 Y2K Compliance. The following should be considered a Y2K
Readiness Disclosure under the Year 2000 Information and Readiness Disclosure
Act. eCredit.com hereby warrants that (i) the proprietary software applications
and tools developed by eCredit.com and used in providing the Outsourced Services
(the "Software") will properly perform all date functions, including, but not
limited to, processing the year 2000, leap years, and calculations and formulas
involving dates in more than one century ("Century Compliant"), and (ii) the
Software will not cause an abnormal abort to occur, or generate incorrect values
or invalid outputs, based on management, manipulation or calculation of data
involving dates, including leap days ("Date Compliant") when used with other
components which are Century Compliant and Date Compliant. In the event any
Software is not Century Compliant or Date Compliant, eCredit.com shall, to the
extent necessary, promptly repair such Software or replace such Software with
Software of equivalent functionality and performance which meets the foregoing
standards; this shall be Client's sole remedy for breach of these warranties and
for failure of the Outsourced Services to be Century Compliant and Date
Compliant. Client hereby warrants that its information systems and processes and
databases including but not limited to, Client's Business Logic and Data,
presently used by it and used by it in the future in connection with the
Outsourced Services, other than the Software, is Century Compliant and Date
Compliant and that eCredit.com shall have no liability arising out of the
failure of such information systems and processes and databases to be Century
Compliant and Date Compliant.
6.2 Certain Obligations of Client. Client hereby represents,
warrants and covenants that throughout the term of this Agreement, Client shall
(i) have the right to disclose or cause the disclosure of Client's Business
Logic and Data to eCredit.com and such disclosure and eCredit.com's use thereof
pursuant to this Agreement shall be in compliance with all applicable laws
including but not limited to the federal and state laws pertaining to credit,
debt collection, business practices and consumer protection; (ii) not use the
Outsourced Services on behalf of any third party and only in connection with a
credit transaction involving the Client's customer on whom the information is to
be furnished and involving the extension of credit to, or review or collection
of an account of, the Client's customer; (iii) submit any marketing literature
Client creates pertaining to Outsourced Services to eCredit.com for review and
approval prior to publication; (iv) Client shall bear all collection risk
(including, without limitation, credit card fraud and any other type of credit
fraud) with respect to sales of its products; (v) be solely responsible for
maintaining complete backup records of all information relating to its
customers' orders, inquiries and purchases and any other customer information,
once transactions have been processed; (vi) assume all responsibility for: the
use, development, content and maintenance of Client's Business Logic and Data
and all expenses and liabilities relating thereto, the use of the Outsourced
Services pursuant to this Agreement, the results obtained there from; and any
liability for any authorized or unauthorized use of the Outsourced Services and
(vii) only use the Outsourced Services with respect to credit transactions in
the United States of America unless otherwise agreed by the parties in advance.
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<PAGE> 5
6.3 Non-Compete and Business Non-Solicitation.
(a) Client acknowledges and agrees with eCredit.com
that the Outsourced Services are unique in nature and that the Outsourced
Services form an integral component of eCredit.com's Program. Accordingly, and
in furtherance of this Agreement, Client agrees with eCredit.com for a period
commencing the date of this Agreement and ending two (2) years after the
termination of this Agreement, Client and its affiliates will not establish,
own, operate, manage or control ("control") any business which is engaged in the
development or delivery of products or service solutions to third parties that
are the same as or substantially similar to the Outsourced Services and that
competes with the business of eCredit.com (a "Competing Business").
(b) eCredit.com acknowledges and agrees with Client
that the Client's business is unique in nature and in furtherance of this
Agreement, eCredit.com agrees with Client that for a period commencing the date
of this Agreement and ending two (2) years after the termination of this
Agreement, eCredit.com and its affiliates will not establish, own, operate,
manage or control ("control") any business which is engaged in the development
or delivery of products or service solutions to third parties that are the same
as or substantially similar to the Client's business (a "Competing Business").
(c) In the event that any provisions in this Section
7.3 shall be determined to be unenforceable, it shall be interpreted to extend
only over the maximum period of time, geographic area or range of activities as
to which it may be enforceable.
7. Indemnification.
7.1 Indemnification. Each party shall indemnify, defend and
hold harmless the other party and its officers, employees, agents, affiliates
and subsidiaries against and from all losses, expenses, liabilities, damages and
costs including, without limitation, reasonable attorneys' fees, that may at any
time be incurred by any of them in connection with (i) non-payment of fees and
charges payable hereunder, and (ii) any allegation, investigation, claim, suit
or other proceeding threatened or brought against either of them related to any
representations, warranties and covenants hereunder.
7.2 Notice; Defense of Claims. Each party shall give prompt
written notice to the other party of any claim for indemnification hereunder,
specifying to the extent known the amount and nature of the claim, and any
matter which in the opinion of such party is likely to give rise to an
indemnification claim. The indemnifying party shall have the right to control
the defense through counsel of its choosing. The indemnified party shall have
the right to the extent of its interests to participate on its own behalf and at
its own expense in such matter or its settlement through counsel of its
choosing.
8. DISCLAIMER OF IMPLIED WARRANTIES AND LIMITATION OF LIABILITY. EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ECREDIT.COM HEREBY SPECIFICALLY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
OUTSOURCED SERVICES, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN,
IN NO EVENT (I) SHALL ECREDIT.COM BE LIABLE TO THE OTHER PARTY FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES
5
<PAGE> 6
(EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), SUCH
AS, BUT NOT LIMITED TO, LOSS OF REVENUE, PROFITS OR BUSINESS, COSTS OF DELAY,
COSTS OF LOST OR DAMAGED DATA OR DOCUMENTATION; OR (II) SHALL ECREDIT.COM BE
LIABLE TO CLIENT WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR
ANY AMOUNTS IN EXCESS, IN THE AGGREGATE, OF FEES PAID TO ECREDIT.COM HEREUNDER
DURING THE THREE-MONTH PERIOD PRIOR TO THE DATE THE CAUSE OF ACTION AROSE. THE
EXCLUSIONS AND LIMITATIONS OF THIS SECTION DO NOT APPLY TO ANY BREACH OF
OBLIGATIONS HEREUNDER REGARDING CONFIDENTIALITY OR INTELLECTUAL PROPERTY, OR
LIABILITY ARISING FOR BODILY INJURY OF A PERSON, OR IN STATES THAT PROHIBIT THE
EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LIMITATIONS ON
THE DURATION OF AN IMPLIED WARRANTY.
9. Miscellaneous.
9.1 Publicity. eCredit.com shall be entitled to disclose the
existence of the relationship formed hereunder between Client and eCredit.com.
eCredit.com agrees to use commercially reasonable efforts to coordinate the
release of its announcements in conjunction with related announcements of
Client. Client hereby grants eCredit.com a limited, non-exclusive,
non-transferable royalty-free license to use its trademarks and service marks
solely for the issuance of media releases, public announcements and customer
reference materials.
9.2 No Third Party Benefits. This Agreement is entered into
solely for the respective benefit of the parties and their respective successors
and assigns, and nothing in this Agreement will be construed as giving any
entity other than the parties to this Agreement, persons and entities expressly
indemnified hereunder and their respective successors and permitted assigns, any
right, remedy or claim under this Agreement.
9.3 Relationship of Parties. The parties shall perform all of
their duties under this Agreement as independent contractors. The parties
understand and agree that, except as specifically provided in this Agreement,
neither party grants the other party the power or authority to make or give any
agreement, statement, representation, warranty, or other commitment on behalf of
the other party, or to enter into any contract or otherwise incur any liability
or obligation, express or implied, on behalf of the other party, or to transfer,
release, or waive any right, title, or interest of such other party.
9.4 Notices. Notices to either party shall be in writing to
the address indicated on the first page of this Agreement, Attention: President,
and shall be deemed effective when received when sent by facsimile (receipt
confirmed) commercial courier, or personal delivery, or on the second day
following the date after depositing the notice with a reputable, overnight
delivery service. The parties may, by notice given under this paragraph,
designate different or up to two (2) additional addresses to which notices must
be sent.
9.5 Severability. If any term or condition of this Agreement
is adjudged to be illegal or unenforceable, all other terms shall remain in
force, and the term or condition held illegal or unenforceable shall remain in
effect as far as possible in accordance with the intention of the parties.
6
<PAGE> 7
9.6 Entire Agreement; Modifications. This Agreement represents
the complete and exclusive statement of the agreement between the parties, and
supersedes all prior proposals and understandings, oral or written, relating to
the subject matter of this Agreement. This Agreement may be amended only in a
writing executed by the parties.
9.7 Effect of Waiver. A party's failure to exercise any right
under this Agreement will not constitute a waiver of any other terms or
conditions of this Agreement or a right at any time thereafter to require exact
and strict compliance with the terms of this Agreement.
9.8 Force Majeure. Neither party shall be responsible for any
delay or failure in performance resulting from acts beyond their control
including but not be limited to an act of God; an act of war, sabotage or
terrorism; a riot or other civil disturbance; outages of electrical,
telecommunications or computer server services provided by third parties; an
epidemic, fire, flood, extreme weather condition, or other disaster; an act of
government; delays in transit or delivery; or labor shortage, labor unrest,
strike or lockout; provided that, in order to be excused from delay or failure
to perform, such party must act diligently and reasonably to remedy the cause of
such delay or failure.
9.9 Venue. Except with respect to any dispute subject to
arbitration in accordance with the provisions of Section 9.11 below, each party
hereto hereby irrevocably agrees that any legal action or proceeding arising out
of this Agreement shall be brought: i) if initiated by Client, only in the
Superior Court of The Commonwealth of Massachusetts in and for Norfolk County or
the United States District Court for the Eastern Division of the District of
Massachusetts (or, if such court does not have subject matter jurisdiction over
such dispute, in any other state or federal court located in the Commonwealth of
Massachusetts) or ii) if initiated by eCredit.com, in comparable courts in the
state of Florida, preserving, however, all rights of removal to a federal court
under 28 U.S.C. ss.1441. Each party hereto irrevocably waives any objection to
the venue of the aforesaid courts in connection with any legal action or
proceeding against it arising out of this Agreement. Each party hereto also
agrees that any trial arising out of or in connection with a claim against it in
connection with this Agreement shall be before the court and each party's right
to a trial by jury is hereby waived. Each party hereto irrevocably consents to
the service of process outside the territorial jurisdiction of said courts in
any such action or proceeding by mailing copies thereof by registered United
States mail, postage prepaid, to its address as specified above.
9.10 Dispute Resolution. Except that the parties shall be
entitled to apply to the courts for mandatory or injunctive equitable relief in
respect to a violation of this Agreement which would cause irreparable harm to
the other for which no adequate remedy at law exists and that eCredit.com shall
be entitled to apply to the courts to collect due and unpaid invoices, any
dispute between eCredit.com and Client arising out of, or relating to this
Agreement or the breach thereof will be decided by arbitration in accordance
with the Federal Arbitration Act (9 U.S.C. ss.ss. 10 and 11) and the Commercial
Arbitration Rules of the American Arbitration Association then obtaining subject
to the limitations of this Section 9.11. Notice of the demand for arbitration
will be filed in writing with the other party to the Agreement and with the
American Arbitration Association. In no event shall any such demand be made
after the date when institution of legal or equitable proceedings based on such
claim, dispute or other matter in question would be barred by the applicable
statute of limitations. The award rendered by the arbitrators will be final,
judgment may be entered upon it in any court having jurisdiction thereof, and
will not be subject to modification or appeal except to the extent permitted by
Sections 10 and 11 of the Federal Arbitration Act.
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<PAGE> 8
9.11 Counterparts. This Agreement may be executed in
counterparts, including counterpart transmitted by facsimile, each of which
shall be deemed an original, and all such counterparts shall constitute one and
the same agreement.
9.12 Section Headings. The section and subsection headings
used herein are for reference and convenience only, and shall not enter into the
interpretation hereof.
9.13 Neutral Construction. The parties to this Agreement agree
that this Agreement was negotiated fairly between them at arm's length and that
the final terms of this Agreement are the product of the parties' negotiations.
Each party warrants and represents that it has sought and received legal counsel
of its own choosing with regard to the contents of this Agreement and the rights
and obligations affected hereby. The parties agree that this Agreement shall be
deemed to have been jointly and equally drafted by them, and that the provisions
of this Agreement therefore should not be construed against a party or parties
on the grounds that the party or parties drafted or was more responsible for
drafting the provision(s).
9.14 Employees. Neither eCredit.com nor Client shall hire or
seek to engage the services of, nor offer to pay commissions, compensation or
any other form of incentives to the employees or consultants of the other for
any purpose whatsoever without the express written consent of the other party.
This provision shall expire eighteen (18) months after the termination of this
Agreement.
9.15 Assignment. Neither this Agreement, nor any rights
hereunder, may be assigned by Client, unless assignment by Client is accepted in
writing by eCredit.com and any attempt to assign this Agreement or any rights
hereunder without written approval by eCredit.com shall automatically terminate
this Agreement. This Agreement, and any right hereunder, may be assigned in
whole or in part by the eCredit.com to any subsidiary or affiliate of
eCredit.com or to any successor or assign of the business of eCredit.com at any
time during the term of this Agreement.
__________(Initial) ______(Date) __________(Initial) ______(Date)
eCredit.com, Inc. Client
8
<PAGE> 9
SCHEDULE 1
SPECIFICATIONS
__________(Initial) ______(Date) __________(Initial) ______(Date)
eCredit.com, Inc. Client
9
<PAGE> 10
SCHEDULE 2.1
PAYMENT
(a) INSTALLATION AND IMPLEMENTATION FEES:
Client will pay fees for installation and implementation of Client's Business
Logic on the Outsourced Services. Installation and implementation fees for
initial installation of Outsourced Services customized according to Client's
Business Logic are estimated at between 7 to 14 days at $1800 per day. A
specification document as defined in Schedule 1 will be completed within 30 days
of the execution of this Agreement and will include final installation and
implementation fees. Payment of fifty (50%) percent of installation and
implementation fees will be due upon Client's approval of the Specifications.
The remaining fifty (50%) percent of installation and implementation fees will
be payable in equal monthly installments over the installation period.
(b) MONTHLY FEES:
Client will pay a monthly fee: Based on the following schedule
** Transaction - Pricing (** Transaction defined as cumulative sales between
single buyer and single seller in any given day.)
Guaranteed Monthly Transaction volumes* Price per Transaction
--------------------------------------- ---------------------
Less than 1,000 $25.00
1,000 - 2,999 $20.00
3,000 - 4,999 $18.00
5,000 - 7,999 $16.50
*assumes Client is actually running transactions through the Global Financing
Network
Year 2000 Jan-March 300 Committed Transactions per Month $20 per transaction
- --------- April-June 600 Committed Transactions per Month $20 per transaction
July-Sept 900 Committed Transactions per Month $20 per transaction
Oct-Dec 1,000 Committed Transactions per Month $20 per transaction
Year 2001 1,500 Committed Transactions Per Month $20 per transaction
- ---------
For transactions in the year 2001, World Commerce can take advantage of pricing
discounts per transaction if volumes exceed 3,000 transactions per month. The
price per transaction for these commitments will be based on the above listed
pricing from 12-30-1999.
Year 2002 3,000 Committed Transactions Per Month $18 per transaction
- ---------
For transactions in the year 2002, World Commerce can take advantage of pricing
discounts per transaction if volumes exceed 5,000 transactions per month. The
price per transaction for these commitments will be based on the eCredit.com
listed pricing as of January 1, 2002.
The fees as described above do not include, and Client will reimburse
eCredit.com for, fees to third parties for access to information (e.g., credit
bureaus and other information providers), other proprietary content, or
analytics (e.g., scorecards, fraud detection analytics) incurred at the request
or on behalf of Client.
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<PAGE> 11
(c) LATE PAYMENT:
All late payments shall bear interest at an annual rate equal to the lower of
eighteen percent (18%) or the highest amount permitted by law until paid in
full.
__________(Initial) ______(Date) __________(Initial) ______(Date)
eCredit.com, Inc. Client
11
<PAGE> 12
SCHEDULE 3.1
TERM
INITIAL TERM
Three (3) years
__________(Initial) ______(Date) __________(Initial) ______(Date)
eCredit.com, Inc. Client
12
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES
1. World Commerce Online - Floraplex, Inc. (a Florida corporation
2. World Commerce Online - Freshplex, Inc. (a Florida corporation)
3. FNP (Fresh Products Network) B.V.
4. WCO B.V. i.o.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet, Consolidated Statement of Operations and
Consolidated Statement of Cash Flows included in the Company's Form 10 for the
period ending December 31, 1999, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 10,553,021
<SECURITIES> 0
<RECEIVABLES> 3,785,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,570,775
<PP&E> 6,477,743
<DEPRECIATION> (347,577)
<TOTAL-ASSETS> 22,721,727
<CURRENT-LIABILITIES> 2,298,871
<BONDS> 0
27,598,983
0
<COMMON> 15,435
<OTHER-SE> (7,283,489)
<TOTAL-LIABILITY-AND-EQUITY> 22,721,727
<SALES> 43,130
<TOTAL-REVENUES> 43,130
<CGS> 0
<TOTAL-COSTS> 12,457,938
<OTHER-EXPENSES> 56,587
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 166,129
<INCOME-PRETAX> (12,637,524)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,637,524)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,637,524)
<EPS-BASIC> (2.66)
<EPS-DILUTED> (2.66)
</TABLE>
